Sunday, May 26, 2019

oil prices drop most this year; US gasoline imports at 8 year high; DUCs down; uncomplete well backlog at 6.0 months

oil prices saw their largest drop of 2019 this week, as a worsening impasse in the US-China trade war threatened to precipitate a global economic slowdown and an associated decrease in demand for oil...after rising 1.8% to $62.76 a barrel on an outbreak of attacks on oil infrastructure in the Middle East last week, prices of US crude for June delivery opened higher and rose to as high as $63.81 a barrel on Monday morning following Trump's tweeted threat to destroy Iran, but eased from that multi-week high later in the day to settle 34 cents higher at $63.10 a barrel, on indications from OPEC leadership that they would drive down crude inventories “gently”...June oil prices started higher again on Tuesday, but then pulled back on concerns that a lengthy trade war between the US and China would limit crude demand, ending the day 11 cents lower at $62.99 a barrel as trading in the US June oil contract expired...quoting the price of the oil contract for July, which had slipped 8 cents to $63.13 a barrel on Tuesday, Wednesday saw oil prices sink as an unexpected build in U.S. crude stockpiles compounded worries that a prolonged trade war would dent crude demand and end $1.71 or 2.7% lower at $61.39 a barrel...extending those already steep losses, oil prices tumbled nearly 6% on Thursday, as concerns grew that the China-U.S. trade conflict was fast turning into a technology war between the world’s two largest economies, and ended $3.51 a barrel, or 5.7%, lower, $57.91 a barrel, having earlier touched $57.33 a barrel, the lowest oil price since March 13th...oil prices recovered a bit on Friday ahead of the long U.S. and UK holiday weekends, with US crude rising 72 cents or 1.2% to $58 a barrel as oil drillers cut rigs for third week in a row, but were still down more than 6% for the week in posting the worst week this year, pressured by rising inventories and concerns over an economic slowdown...

since oil prices seem to have turned the corner after rising most of this year, we'll include a graph of their recent trajectory here so you can see what that change looks like...

May 25 2019 oil prices

the above graph is a Saturday afternoon screenshot of the interactive US oil price graph at Daily FX, an online platform that provides trading news, charts, indicators and analysis of the markets...each bar on the above graph represents oil prices for a day of oil trading between December 24, 2018 and Friday of this week, wherein the green bars represent the days when the price of oil went up, and red bars represent the days when the price of oil went down...for green bars, the starting oil price at the beginning of the day is at the bottom of the bar and the price at the end of the day is at the top of the bar, while for red or down days, the starting price is at the top of the bar and the price at the end of the day is at the bottom of the bar...also slightly visible on this "candlestick" style graph are the faint grey "wicks" above and below each bar, to indicate trading prices during the day that were above or below the opening to closing price range for that day...(note that since the above graph includes off market and after hours trading, the prices shown above do not correspond exactly to the NYMEX exchange prices we have been quoting)...you can see that oil prices had been rallying steadily since falling to a 35 month low on Christmas eve, and had been up more than 50% from that low by April 23rd, after which they turned lower on a large inventory build and Trump's jawboning of OPEC...now down 4 out of the last 5 weeks, the trend now appears to be for them to head lower, with no resolution to the US China trade war in sight....   

natural gas prices also ended lower this week as another triple digit storage build and rebounding production more than offset forecasts for possible near term record high temperatures in the Southeast....after rising 1.2 cents to $2.631 per mmBTU on forecasts for warmer temperatures last week, prices of natural gas for June delivery recovered from a 13 cent drop midweek to end the week just 3.3 cents lower at $2.598 per mmBTU​ after the weekly EIA​ storage​ report ​came in on the low end of ​expectations...the natural gas storage report for the week ending May 17th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 100 billion cubic feet to 1,753 billion cubic feet by the end of the week, which meant our gas supplies were 137 billion cubic feet, or 8.5% more than the 1,616 billion cubic feet that were in storage on May 18th of last year, while still 274 billion cubic feet, or 13.5% below the five-year average of 2,027 billion cubic feet of natural gas that have typically been in storage as of the third weekend in May in recent years....this week's 100 billion cubic feet injection into US natural gas storage was a bit below the 103 billion cubic foot increase in supplies projected by Platts, while it was still higher than the 88 billion cubic feet of natural gas that have historically been added to gas storage during the same week of May....while this week's​ inventory​ increase was above average for this time of year, it fell short of the 108 billion cubic feet that were added during the same week of 2014, hence bringing to an end the 7 week streak of 5 year seasonal high injections that we've seen this spring...nonetheless, the 646 billion cubic feet of natural gas that have been added to storage over the past 8 weeks exceeds the addition in any previous similar 8 week period in the modern record, topping the 630 billion cubic feet of gas that were added to storage over the same 8 weeks of 2010....early spring injections for most previous years weren't even close; for instance, only 246 billion cubic feet of natural gas were added to storage over the same 8 weeks of 2018...

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending May 17th, showed that a drop in our oil imports was mostly offset by a drop in our oil exports and an increase in our oil production, so we again saw a sizable addition to our commercial supplies of crude for the seventh time in nine weeks...our imports of crude oil fell by an average of 669,000 barrels per day to an average of 6,943,000 barrels per day, after rising by an average of 919,000 barrels per day over the prior week, while our exports of crude oil fell by an average of 425,000 barrels per day to 2,922,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,021,000 barrels of per day during the week ending May 17th, 244,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be 100,000 barrels per day higher at 12,200,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,221,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 16,578,000 barrels of crude per day during the week ending May 17th, 98,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 516,000 barrels of oil per day were being added to the oil that's in storage in the US....hence, we can see that this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 872,000 barrels per day short of what was added to storage plus what the oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+872,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"....with that much oil unaccounted for, we have to figure one or more of this week's crude oil metrics are off by a statistically significant amount...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports fell to an average of 7,166,000 barrels per day last week, 9.4% less than the 7,908,000 barrel per day average that we were importing over the same four-week period last year...the 516,000 barrel per day increase in our total crude inventories was due to a 678,000 barrels per day addition to our commercially available stocks of crude oil, which was partially offset by a 162,000 barrel per day withdrawal from the oil stored in our Strategic Petroleum Reserve, part of a release from our reserves intended to blunt the shortage of crude in the Gulf resulting from the Venezuelan oil sanctions...this week's crude oil production was reported to be 100,000 barrels per day higher at 12,200,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,700,000 barrels per day, while a 4,000 barrel per day decrease to 477,000 barrels per day in Alaska's oil production was not enough to impact the final rounded national total...last year's US crude oil production for the week ending May 18th was at 10,725,000 barrels per day, so this reporting week's rounded oil production figure was 13.8% above that of a year ago, and 44.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 89.9% of their capacity in using 16,578,000 barrels of crude per day during the week ending May 17th, down from 90.5% of capacity the prior week, and below the historical refinery utilization rate for this time of year....likewise, the 16,578,000 barrels per day of oil that were refined this week were a bit below the 16,628,000 barrels of crude per day that were being processed during the week ending May 18th, 2018, when US refineries were operating at 91.8% of capacity... 

with the decrease in the amount of oil being refined, gasoline output from our refineries was a bit lower, decreasing by 29,000 barrels per day to 9,883,000 barrels per day during the week ending May 17th, after our refineries' gasoline output had decreased by 217,000 barrels per day the prior week....with that decrease in gasoline output, this week's gasoline production was 1.7% below than the 10,052 ,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 58,000 barrels per day to 5,206,000 barrels per day, after our distillates output had increased by 175,000 barrels per day the prior week...but even with this week's decrease, the week's distillates production was 5.4% more than the 4,938,000 barrels of distillates per day that were being produced during the week ending May 18th, 2018.... 

despite the decrease in our gasoline production, our supply of gasoline in storage at the end of the week rose for just the second time in 14 weeks, increasing by 3,716,000 barrels to 228,740,000 barrels over the week to May 17th, after ​our ​gasoline supplies had fallen by 1,123,000 barrels over the prior week....our gasoline supplies rose this week even though the amount of gasoline supplied to US markets increased by 281,000 barrels per day to 9,429,000 barrels per day, after decreasing by 723,000 barrels per day the prior week, because our imports of gasoline rose by 598,000 barrels per day to an eight year high of 1,350,000 barrels per day, while our exports of gasoline fell by 369,000 barrels per day to 416,000 barrels per day...but even after having reached an all time record high seventeen weeks ago, our gasoline supplies are now 2.2% lower than last May 18th's inventory level of 233,897,000 barrels, while they are back to near the five year average of our gasoline supplies at this time of the year...  

since the week's jump in gasoline imports was quite exceptional, we'll take a look at a historical graph of those imports and try to ​figure out what's been going on...

May 22 2019 gasoline imports up to May 17

the above graph is a slightly truncated version of the long term graph of US gasoline imports that accompanies the EIA's html historical gasoline imports spreadsheet​, and​ as the heading indicates, th​is graph shows the weekly volume of US gasoline imports in thousands of barrels per day from 1995 to the current week, which shows the obvious spike to an 8 year high...while there is a seasonality to gasoline imports, ie, generally higher in the summer and lower in the winter, gasoline imports over recent weeks have been above the ​seasonal ​trend of previous years; part of the reason for that increase ​has been our falling gasoline inventories; as we noted earlier, our gasoline supplies had hit a record high of 259,615,000 barrels 17 weeks ago, ​but had fallen by more than 13% up until this week's increase...so why have our gasoline supplies been falling ​so precipitously ​this early, before the summertime driving season?  part of it is ​seasonal, as refineries undergo seasonal maintenance and gear up for warm weather blends in the late winter & early spring months; but this year has seen US refineries slow much more than usual as they seek replacements for the heavy sour crude they had been receiving from Venezuela before the ​administration sponsored coup attempt and related export sanctions; ​just ​two weeks after our gasoline supplies hit a record high, our oil imports fell to a 22 year low and refinery utilization fell to 85.9%, its lowest in 16 months in the immediate impact of those sanctions...and while it has recovered​ from that nadir, refinery utilization has remained below trend since, with a corresponding decrease in gasoline output...the problem is that the heavy sour crude that US Gulf Coast refineries were built ​to use has limited alternative sources outside of Venezuela; ie, the tar sands of Canada, Mexican Maya, and some sours from the Saudis and Iraq...since those supplies were unavailable or already contracted for, US refineries have been forced to buy Russian Urals ​crude ​at a premium price to replace the Venezuelan crude they lost to sanctions...at the same time, the Russians are providing the financing for Venezuela to sell their oil to other markets, like India, ​thus ​getting around the sanctions that shut off our ​own ​supply...

meanwhile, even with the modest decrease in our distillates production, our supplies of distillate fuels managed to increase for the second time in 10 weeks, rising by 768,000 barrels to 126,415,000 barrels during the week ending May 17th, after our distillates supplies had increased by 84,000 barrels over the prior week....our distillates supplies rose because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 307,000 barrels per day to 3,787,000 barrels per day, and because our imports of distillates rose by 61,000 barrels per day to 102,000 barrels per day, while our exports of distillates rose by 212,000 barrels per day to 1,411,000 barrels per day ...after this week's inventory increase, our distillate supplies were 10.9% higher than the 113,995,000 barrels of distillate that we had stored on May 18th, 2018 (a four year low at the time) even as they remain roughly 4% below the five year average of distillates stocks for this time of the year...

finally, ​with higher crude production and a drop in our oil exports, our commercial supplies of crude oil in storage increased for the thirteenth time in 18 weeks, rising by 4,470,000 barrels, from 472,035,000 barrels on May 10th to 476,775 ,000 barrels on May 17th....that increase lifted our crude oil inventories to 4% above the recent five-year average of crude oil supplies for this time of year, and to more than 35% higher than the prior 5 year (2009 - 2013) average of crude oil stocks as of the first weekend in May, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of May 10th were 8.8% above the 438,132,000 barrels of oil we had stored on May 18th of 2018, but at the same time still 7.7% below the 516,340,000 barrels of oil that we had in storage on May 19th of 2017, and 5.6% below the 505,571,000 barrels of oil we had stored on May 20th of 2016...    

This Week's Rig Count

the US rig count was down for the thirteenth time in fourteen weeks this past week, and hence was at another 14 month low....Baker Hughes reported that the total count of rotary rigs running in the US fell by 4 rigs to 983 rigs over the week ending May 24th, which was also down by 76 rigs from the 1059 rigs that were in use as of the May 25th report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil fell by 5 rigs to 797 rigs this week, which was also 62 fewer oil rigs than were running a year ago, and less than half of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations rose by 1 rig to 186 natural gas rigs, which was still down by 12 rigs from the 198 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

drilling activity offshore in the Gulf of Mexico was unchanged with 22 rigs still deployed this week, with 20 of those offshore from Louisiana and two more drilling in Texas offshore waters; that's up from the 18 rigs that were deployed in the Gulf in the same week a year ago, when 17 rigs were drilling in Louisiana waters and one was offshore from Texas, and up from the national total of 19 rigs offshore a year ago, as a rig was also set up in the waters offshore from Alaska at that time...

the count of active horizontal drilling rigs was down by 3 to 863 horizontal rigs this week, which was thus another 14 month low for horizontal drilling, with 63 fewer horizontal rigs running ​this week than the 926 horizontal rigs that were in use in the US on May 25th of last year, ​which was also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was down by 4 rigs to 69 directional rigs this week, but those were still up by 2 rigs from the 67 directional rigs that were in use during the same week of last year...on the other hand, the vertical rig count was up by 3 rigs to 51 vertical rigs this week, but those were still down from the 66 vertical rigs that that were operating on May 25th of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of May 24th, the second column shows the change in the number of working rigs between last week's count (May 17th) and this week's (May 24th) count, the third column shows last week's May 17th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 25th of May, 2018...       

May 24 2019 rig count summary

the 4 rig decrease you see indicated for New Mexico all came out of the Permian basin, as the Texas Permian saw a net increase​ of one rig​...while two rigs were shut down in Texas Oil District 8A, or the northern Permian Midland basin, and two more rigs were idled in Texas Oil District 7C, or the southern Permian Midland basin, Texas Oil District 8, which would be the core Permian Delaware, saw a 5 rig increase, thus putting the net Texas Permian into the plus column...elsewhere in Texas, three rigs were added in Texas ​Oil ​District 1, while two were pulled from District 2 and one was shut down in District 3, which combined netted a one rig increase in the Eagle Ford​ and a one rig decrease outside of the basin​, while another rig was pulled out of the Granite Wash in panhandle District 10, which suggests a rig was concurrently added back in the Oklahoma portion of of the Granite Wash...among natural gas rigs, one was ​set up in the Denver-Julesburg Niobrara​ oil play​, which also had two oil rigs shut down at the same time, and two more natural gas rigs were added in the Marcellus, one each in Pennsylvania and in West Virginia, while natural gas rigs were idled in Ohio's Utica​ shale​ and in another basin not tracked separately by Baker Hughes...

DUC well report for March

last week saw the release of the EIA's Drilling Productivity Report for May, which includes the EIA's April data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the second month in a row, this report showed a decrease in uncompleted wells nationally in April, as drilling of new wells decreased and completions of drilled wells increased....while there continued to be a increase of newly drilled but uncompleted wells (DUCs) in the Permian basin of western Texas and New Mexico, all other regions either saw decreases or little change, thus more than offsetting the Permian increases...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 43 wells, from a revised 8,433 DUC wells in March to 8,390 DUC wells in April, which still represents a 23.7% increase from the 6,781 wells that had been drilled but remained uncompleted as of the end of April a year ago...that was as 1,364 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during April, down by 14 from the 1,386 wells drilled in March and the lowest in 11 months, while 1,407 wells were completed and brought into production by fracking, an increase of 12 well completions from the 1,395 completions seen in March, and the 1329 well completions of February...at the April completion rate, the 8,390 drilled but uncompleted wells left at the end of the month represent a 6.0 month backlog of wells that have been drilled but not yet fracked...  

in a contrast ​to what we've seen over most of the past couple of years up until a month ago, most of the April DUC well decreases were in oil producing regions, with all major oil producing regions except for the Permian showing double digit drops... DUC wells left in the Oklahoma Anadarko decreased by 26 to 998 wells, as 136 wells were drilled into the Anadarko basin during April while 162 Anadarko wells were being fracked....meanwhile, DUC wells in the Eagle Ford of south Texas decreased by 22, from 1,510 DUC wells in March to 1,488 DUCs in April, as 186 wells were drilled in the Eagle Ford during April, while 208 Eagle Ford wells were completed...in addition, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 13 to 545, as 182 Niobrara wells were drilled in April while 195 Niobrara wells were being fracked...at the same time, DUC wells in the Bakken of North Dakota fell by 12, from 726 DUC wells in March to 714 DUCs in April, as 118 wells were drilled into the Bakken in April, while 130 of the drilled wells in that basin were completed...finally, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 19 wells, from 479 DUCs in March to 460 DUCs in April, as 130 wells were drilled into the Marcellus and Utica shales during the month, while 149 of the already drilled wells in the region were fracked...

on the other hand, the Permian basin of west Texas and New Mexico saw its total count of uncompleted wells rise by 47, from 3,9​1​​7 DUC wells in March to 3,964 DUCs in April, as 555 new wells were drilled into the Permian, but only 508 wells in the region were fracked...lastly, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region also saw their uncompleted well inventory increase by 2 wells to 221, as 57 wells were drilled into the Haynesville during April, while 55 Haynesville wells were fracked during the same period....thus, for the month of April, DUCs in the five oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a net of 26 wells to 7,709 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 17 wells to 681 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and natural gas...

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Public comment sought on Wayne National Forest pipeline project - The Federal Energy Regulatory Commission and the U.S. Forest Service are seeking public input on the proposed Buckeye Xpress Project.This project, proposed by Columbia Gas, involves 66.1 miles in Southeast Ohio, including approximately 12.6 miles of pipeline construction and 10.2 miles of pipeline decommissioning in the Wayne National Forest Ironton Ranger District.Columbia Gas's proposed project is to construct 66.1 mies of new 36-inch diameter natural gas pipeline, along with replacing and expanding existing pipelines and related facilities in parts of Vinton, Jackson, Lawrence and Gallia counties.More details about the project can be found online. Comments on the proposed Buckeye Xpress Project may be submitted online at www.ferc.gov under the Documents and Filings link, or be submitted by mail to Kimberly D. Bose, secretary of the Federal Energy Regulation Commission, at 888 First St. NE, Room 1A, Washington, DC 20426. Comments must reference docket number CP18-137-000 in the submission and must be filed or postmarked within the 30-day comment period, which ends on June 18, 2019.

This Town Didn't Want to Be a Radioactive Waste Dump. The Government Is Giving Them No Choice. —David and Pam Mills have grown tomatoes, peppers, cucumbers, and okra on their secluded Appalachian property for about 18 years now. This will be the first year the retired couple doesn’t. They just can’t trust their soil anymore. Past the shed and through the gray, bare trees that grow in the backyard, bulldozers and dump trucks are busy scooping tan-colored dirt atop an overlooking hill on a brisk January afternoon. They’re constructing a 100-acre landfill for radioactive waste.  On a short metal fence marking where the Mills property ends, a sign reads, “U.S. PROPERTY, NO TRESPASSING,” in big, bold letters with red, white, and blue borders. The Department of Energy (DOE) owns what sits on the other side: the Portsmouth Gaseous Diffusion Plant. The DOE built the 1,200-acre facility, located just outside town of Piketon about an hour’s drive south of Columbus in southcentral Ohio, in 1954, as one of three plants it was using to enrich uranium and develop the country’s nuclear weapons arsenal. Now, the agency is trying to clean it up. The landfill—or “on-site waste disposal cell,” as the department calls it—would extend about 60-feet down and house 2 million tons of low-level radioactive waste comprised of soil, asbestos, concrete, and debris. It’ll be outfitted with a clay liner, a plastic cover layer, and a treatment system for any water that leaches through it. When finished, it will be one of the largest nuclear waste dumps east of the Mississippi. Waste could begin entering it as soon as this fall. The Mills have never taken issue with the DOE facility, but they don’t want this landfill.  “It’s gonna contaminate everything,” David says, after he shows me how close the landfill sits to his property. “It’s just a matter of time.” The couple is far from alone in their fears. The 2,000-strong Village of Piketon passed a resolution in August 2017 opposing the landfill. So did thelocal school district and the Pike County General Health District, where Piketon resides. The rural, low income, and largely white county is home to more than 28,000 people across a number of small towns and cities, some of which have passed their own resolutions against this project. Driving through neighborhoods behind Piketon’s main highway, lawn signs covered in red stating “NO RADIOACTIVE WASTE DUMP in Pike County” can be seen everywhere.

Ohio on receiving end of fracking waste  — Residents working to fend off a proposal to place a wastewater injection well along Hubbard Masury Road said this fight is about more than just their community. One trustee thinks it sends the wrong message about the entire state of Ohio. “We’ve absolutely become a dumping ground,” said Rick Hernandez. Data from the Ohio Department of Natural Resources shows from 2012 to so far in 2018, more than 91 million barrels of brine from the hydraulic fracturing, or fracking, industry in Ohio have been injected into class II injection wells in Ohio. That equates to more than 3.8 billion gallons of brine — a salt / water mix used to extract natural gas from below ground shale formations. ODNR numbers also show that more than 85 million barrels — 3.5 billion gallons — of brine produced outside the state have been injected into Ohio’s injection wells between 2012 and so far this year. Steve Irwin, ODNR spokesman, said the regulatory environments in Ohio and Pennsylvania may lead drilling companies to choose to inject their waste in Ohio. Irwin said ODNR has “primacy” to regulate the state’s oil and gas industry, meaning companies that want to establish injection wells in Ohio can apply for permits directly from ODNR. On the other hand, Pennsylvania’s oil and gas industry is regulated by both the state’s Department of Environmental Protection and the U.S. Environmental Protection Agency, which increases the permit application time and expense because a prospective injection company needs a permit from both agencies. State law allows Ohio to benefit financially from accepting fracking waste from other states. The state charges a 5-cent fee for the injection of each barrel of brine that is produced in Ohio. Conversely, the fee for the injection of each barrel of out-of-state brine is 20 cents.’

Belle Vernon sewage plant to stop accepting contaminated landfill runoff - The Belle Vernon sewage treatment plant in Fayette County will no longer accept highly contaminated liquid runoff from a nearby landfill in Rostraver that takes in large amounts of shale gas drilling and fracking waste. The five-member Belle Vernon Municipal Authority board voted unanimously Wednesday evening to stop accepting the landfill’s runoff or “leachate” because its excessive volume and toxic chemical components are damaging the sewage plant’s ability to treat the wastewater before it is discharged into the Monongahela River. By doing so, the board defied the state Department of Environmental Protection, which in January proposed allowing illegal sewage plant discharges into the river to continue and have the landfill pay any fines for the violations. That proposal was contained in a Jan. 4 email from the DEP to Belle Vernon’s engineering firm that says DEP’s “waste management folks have talked to the landfill about entering into a COA (Consent Order and Agreement) where the landfill will agree to pay penalties for effluent violations at the Belle Vernon plant under the COA.” The email continued, saying, “What this does is remove liability from Belle Vernon for current and past violations. In turn, Belle Vernon would need to let the landfill stay connected to their system.” Instead, the board followed the recommendations contained in a seven-page letter, written by private attorneys John and Kendra Smith, that details the yearlong problems that caused the sewage plant to repeatedly violate its state discharge permit and the DEP’s position. “We now have a workable solution to the DEP and this problem,” said Belle Vernon Mayor Gerald Jackson, who is also a member of the municipal board. “Before we didn’t have a workable solution. We want to make sure everyone knows the problem is with the landfill, not the sewage treatment plant.” Walter Ziemba, a board member, said he’s concerned with what the sewage plant’s discharges into the Monongahela River are doing to public drinking water intakes downriver in Charleroi, Monongahela and Elizabeth. “The leachate is killing the bugs that digest our sewage, and the testing we did shows contaminants indicative of the landfill accepting drilling and fracking waste,” said Guy Kruppa, the sewage plant superintendent. “Every month, we report the effluent violations. We want to do what’s right, what’s ethical, and ethically correct. But we’re put in a position to be the landfill’s permit to pollute and that’s not right.

Injunction to stop fracking waste from getting into Monongahela River -- A Fayette County judge signed a joint request by the district attorneys for Fayette and Washington County to stop leachate from getting to the Monogahela River. According to District Attorneys Richard Bower and Gene Vittone, the Westmoreland sanitary landfill was pumping 100,000 to 300,000 gallons of contaminated waste water from fracking to the Belle Vernon sewage plant daily. The plant can only treat 50,000 gallons a day.The contaminated waste water was ending up in the Monongahela and the communities downstream. A spokesperson for the landfill says they "decided to shut off the pipe even though we are not in violation of any water quality standards. We do have approved alternatives for disposal of the waste water which will begin immediately."

Air-quality study finds no health risks from natural gas development - An air-monitoring study aimed at determining any health risks from a natural gas well site near the Fort Cherry School District campus found gas development there does not pose acute or chronic health concerns, and showed no air-quality impacts that would cause potential health concerns. The two-year study by Gradient Corp., a Massachusetts environmental and risk science consulting firm, was based on continuous sampling from an unconventional Marcellus Shale well site near the high school and elementary school campus. The project monitored air quality through the development cycle of a six-well pad, from pad construction through each phase of operation and more than a year of production of natural gas and natural gas liquids. Gradient collected data from December 2016 to October 2018 at three sites near the Yonker well pad in Mt. Pleasant Township, using practices recommended by the U.S. Environmental Protection Agency. The firm monitored for particulate matter and volatile organic compounds, and results showed PM2.5 and VOC concentrations were consistently below health-based air comparison values. According to Gradient’s data, measured PM2.5 and VOC concentrations do not provide evidence of elevated long-term average concentrations compared to other DEP regional data in Washington County that are farther from natural gas development. Range Resources commissioned the study – which, it believes, is the first of its kind – and the report is posted on the company’s website. 

EdgeMarc files for bankruptcy and blames Energy Transfer explosion; Energy Transfer says it was 'an act of God' - The early morning fireball that burst from the seams of Energy Transfer’s Revolution pipeline in September has surfaced as the central character in the bankruptcy of EdgeMarc Energy. The Canonsburg oil and gas firm claimed in a Chapter 11 filing in Delaware on Tuesday that the rupture of the pipeline stranded gas from dozens of its Butler County shale wells and cut off a large chunk of the company’s revenue source. The company’s assets include 45,000 acres in Butler County and in Monroe and Washington counties in Ohio and about 60 producing wells, including 48 shut-in wells in Pennsylvania. But court filings reveal more than EdgeMarc’s financial woes. The Canonsburg oil and gas driller and Texas-based pipeline operator Energy Transfer have been engaged in a legal fight since February over culpability in the Beaver County landslide that broke apart the pipeline. That legal dispute hinges on a concept called force majeure, a legal phrase that means, broadly, “an act of God.” In this case, Energy Transfer said the landslide that caused the Revolution pipeline to rupture was out of its control. But, since early this year, EdgeMarc has been attempting to demonstrate in a court of law that Energy Transfer was directly responsible for the pipeline explosion. That explosion burned down a house at the end of a suburban street in Beaver County. The Revolution pipeline — a 40.5-mile natural gas line that runs through Washington, Allegheny, Beaver and Butler counties — had been activated just prior to the burst. Initially, Energy Transfer thought it could have the pipeline up and running within two months. It remains out of service and is unlikely to become operational this year.

Millions of abandoned wells spark climate, safety fears - A couple of years ago, Charlie Brethauer started to smell gas in the backyard of his home. It turned out to be an abandoned natural gas well, 1,800 feet deep and probably drilled in the early 1900s. The company that owned it is long gone. Pennsylvania, where the first American oil was drilled in 1859, is home to between 200,000 and 750,000 so-called orphan wells that have been abandoned and that have no apparent owner.  "It's pretty daunting to look down the road and say, as these things age, they're going to get worse," Brethauer said. "Where's that money going to come from?" Nationwide, there are as many as 3 million orphan wells, with the biggest concentration in the Appalachian states of Pennsylvania, Ohio and West Virginia.As pressure builds to address greenhouse gas emissions from the energy industry, several researchers have delved into the climate change aspects of orphan wells. Pennsylvania's abandoned wells emit 40,000 to 70,000 metric tons of methane a year, between 5% and 8% of the state's human-caused methane emissions, according to a 2016 paper in the Proceedings of the National Academy of Sciences.The bulk of those emissions comes from a relative handful of high-emitting wells, said Mary Kang, a professor at McGill University who was the paper's lead author."It's a story more positive than negative," she said. "You just have to remediate the top high emitters, and you can have a big impact."The wells also can create a safety hazard by increasing the risk of explosions or oozing oil into buildings.Plugging the wells often comes down to money. For the most part, the states are in charge of preventing pollution from those wells. Most of them don't have enough funds to clean up the legacy wells left from the oil industry's first century, and most aren't ready to clean up the tens of thousands of wells drilled during the first decades of the shale drilling boom. Pennsylvania, for example, only has enough money to plug a dozen or so each year. The wells are an issue on public lands, as well. The Bureau of Land Management, which manages drilling on federal and Indian land across the West, doesn't have an effective system to track the number of orphan wells on its territory, according to a 2018 report from the Government Accountability Office.

Governors join Murphy in support of full fracking ban in Delaware River basin - During a meeting with Gov. Phil Murphy, Pennsylvania Gov. Tom Wolf and Delaware Gov. John Carney said they now support a full ban on hydraulic fracturing in the watershed, as well as a ban on any water transfers associated with drilling operations, a stance Murphy previously said he also supports.Pennsylvania Gov. Tom Wolf and Delaware Gov. John Carney on Thursday joined Gov. Phil Murphy in support of a full ban on fracking activities in the Delaware River basin, a position long sought by environmental activists in the region.Wolf and Carney, both Democrats, previously supported a ban on using hydraulic fracturing — a drilling technique being used to extract large bounties of natural gas in Pennsylvania — in the basin. Together with Murphy, the governors represent three of five voting members of the Delaware River Basin Commission, an interstate regulatory agency that also includes the governor of New York, along with a representative of the federal government.In 2017, Wolf and Carney joined New York Gov. Andrew Cuomo in pushing through a 3-1-1 vote on draft DRBC regulations that would ban fracking activities in the basin, which stretches 13,539 miles across the four states. But the draft regulations did not ban the importation of wastewater from drilling operations outside the basin, nor the withdrawal of raw water from the basin to be used for drilling operations elsewhere. Officials with the DRBC have said the draft regulations would actually strengthen importation and exportation protections from a current lack of regulation, but environmental groups have loudly demanded a full ban.

There are 3 active oil spills on Newtown Creek - Three properties along Newtown Creek are actively discharging oil into the waterway, further polluting the already toxic federal Superfund site and possibly undoing years of mitigation efforts. Two of the sites, Manhattan Polybag and Morgan Oil, were former oil storage facilities in Greenpoint. The third, Pratt Oil, was a refinery in Queens. Ian Beilby, New York State Department of Environmental Conservation project manager for the creek, confirmed that he has witnessed some form of petroleum entering the water from all three sites at a Newtown Creek Community Advisory Group meeting on Wednesday. The state is addressing the problem, he said. “It’s an area with a long industrial history,” Beilby told the Brooklyn Eagle. “A lot of that history led to legacy contamination that the state is actively involved in cleaning up through various programs such as the state Superfund, the brownfield cleanup program and the Emergency Response Spills program.” Willis Elkins, executive director of Newtown Creek Alliance, said that he doesn’t believe locals are fully aware of the number of contaminated sites that surround the creek and the impact these spills have on the waterway. “Each site is different, but overall we feel like there is not enough information available as there should be,” Elkins told the Eagle. “We’d like to see more attention paid to it and also resources for the state to do more thorough investigations.” A few precautions have been put in place along the shoreline to contain the oil, such as hard and soft booms.The hard boom — or containment boom — creates a physical division that keeps toxins secluded on one side of the wall, preventing them from entering the main body of the creek. The soft boom — or absorbent boom — works like a sponge, soaking up oil from the surface of the water. The Queens location employs both a hard and a soft boom, while the two Brooklyn sites use only soft ones. While they are preventative, they are not entirely secure, according to Elkins, who said that contaminated water still goes into the creek from tidal flow and the wake of boats.

President Trump aims to open natural gas pipelines with two executive orders - In a victory for the Marcellus Shale re­gion, President Donald Trump signed two executive orders last month aimed at get­ting natural gas into more homes around the country. Spurred on by states that invoked the Clean Water Act and other environmental protections to block construction of natu­ral gas pipelines, President Trump signed the executive orders to speed up construc­tion. “Too often, badly needed energy infra­structure is being held back by special in­terest groups, entrenched bureaucracies and radical activists,” Trump told a crowd at the International Union of Operating Engineers training center in Crosby, Texas, when signing the executive orders. “This obstruction does not just hurt families and workers like you. It undermines our inde­pendence and national security.” New York raised the ire of the Trump Ad­ministration and the fossil fuel industry in 2016 when it denied a water quality per­mit for the Constitution Pipeline, which would bring natural gas to the northeast from Susquehanna County. New York said it was protecting streams and wetlands, even though the Federal Energy Regulato­ry Commission signed off on the pipeline in 2014. In 2017, Washington prevented the construction of export terminals nec­essary for coal production, citing air pol­lution as one of the reasons. Those moves and other actions to delay pipeline con­structions prompted Marcellus shale in­dustry groups to complain, resulting in the executive orders. The Northeast has been dealing with shortages of natural gas for years, even though it’s cheaper and cleaner than oil and plentiful in the United States. Opposi­tion to building new pipelines or expand­ing existing ones by states and environ­mentalists have created huge delivery issues in the Northeast. These issues were on full display in March when Con Edison took the extreme step to place a moratori­um on new natural gas hookups in parts of Westchester County. The region’s biggest utility said it didn’t have enough pipelines to meet the need.

Con Edison limits natural gas service due to pipeline constraints into New York City area - EIA -  In January 2019, Consolidated Edison, Inc., (Con Edison)—the largest utility provider in the New York City area, serving 10 million customers—announced a moratorium on new natural gas connections in most of Westchester County, effective March 16. Demand for natural gas in the New York City area has increased in recent years, leading to concerns about reliability of service. Con Edison claimed it cannot guarantee uninterrupted service to new natural gas connections. Between the announcement of the moratorium and its start on March 16, Con Edison received 1,600 applications for firm natural gas service in the moratorium area. Customers on firm natural gas service contracts have delivery priority above those on interruptible contracts. Despite an increase in natural gas production in the Northeast, regional demand for natural gas—driven both by population growth and switching from heating oil—has grown even faster, causing concern about the ability to provide service to new customers. During recent winters, natural gas utilities in the Northeast have been using most, if not all, available pipeline capacity to transport natural gas to demand centers. Con Edison is also actively pursuing strategies to further alleviate interstate natural gas pipeline constraints, such as using electricity for heating and cooking, providing energy efficiency rebates, and creating demand response programs. Over the last two months, Con Edison announced two agreements with existing pipeline companies to add capacity by upgrading compression facilities. Instead of constructing new pipelines, these projects would provide incremental capacity increases to alleviate constraints. In April 2019, Con Edison reached an agreement with Kinder Morgan’s Tennessee Gas Pipeline to bring additional capacity into Westchester County. In May 2019, Con Edison announced a second agreement, with Iroquois Gas Transmission System, L.P., to provide incremental natural gas capacity to the Bronx and parts of Manhattan and Queens through the Iroquois pipeline. According to Con Edison, both projects could enter service by November 2023.

US natural gas storage volume rises 100 Bcf to 1.753 Tcf- EIA - US natural gas in storage rose 100 Bcf to 1.753 Tcf for the week that ended Friday, the Energy Information Administration reported Thursday. The injection was less than an S&P Global Platts’ survey of analysts calling for a 103 Bcf injection. It was more than the 93 Bcf build reported during the corresponding week in 2018 as well as the five-year average injection of 88 Bcf, according to EIA data.  It was also the third triple-digit build of the year and the 10th straight bearish injection. mAs a result, stocks were 137 Bcf, or 8.5%, more than the year-ago level of 1.616 Tcf and 274 Bcf, or 13.5%, less than the five-year average of 2.027 Tcf. NYMEX Henry Hub June contract added 1.5 cents to $2.559/MMBtu in the moments following the announcement.  The EIA reported a 23 Bcf build in the East to 353 Bcf, compared with 296 Bcf a year ago; a 28 Bcf injection in the Midwest to 364 Bcf, compared with 285 Bcf a year ago; a 7 Bcf build in the Mountain region to 89 Bcf, compared with 106 Bcf a year ago; a 12 Bcf addition in the Pacific to 186 Bcf, compared to 212 Bcf a year ago; and a 31 Bcf injection in the South Central region to 762 Bcf, compared to 718 Bcf a year ago.Total inventories are now 16 Bcf below the five-year average of 369 Bcf in the East, 52 Bcf below the five-year average of 416 Bcf in the Midwest, 42 Bcf below the five-year average of 131 Bcf in the Mountain region, 59 Bcf below the five-year average of 245 Bcf in the Pacific and 105 Bcf below the five-year average of 867 Bcf in the South Central region.

Gas company sues Maryland seeking to resurrect pipeline through Western Maryland - A gas company has filed a federal lawsuit against the state of Maryland after state officials unanimously rejected plans for a pipeline that would carry fracked natural gas through three miles of Western Maryland. Columbia Gas Transmission, which is owned by TransCanada Corp., filed the lawsuit Thursday in U.S. District Court in Baltimore. It seeks a preliminary injunction to give the company the immediate access to property that Maryland’s Board of Public Works denied in January. It also seeks the “award of just compensation and damages.” “This is very unfortunate, but we have exhausted all other reasonable options and are committed to completing this project in a timely fashion to deliver for Mountaineer Gas Company and their customers,” TransCanada spokesman Scott Castleman said in an email. “This project is critical to the continued development and economic prosperity of West Virginia’s Eastern Panhandle and the surrounding region.” Republican Gov. Larry Hogan joined Comptroller Peter Franchot and Treasurer Nancy Kopp, both Democrats, in voting against a needed easement for the pipeline, citing concern for the environment. The pipeline would carry natural gas produced by both traditional and hydraulic fracturing methods. Hogan’s spokesman said Friday the governor remains concerned about the pipeline. “Governor Hogan continues to have great reservations about this project's impact on the Potomac River and the state's waterways — natural assets he is committed to protecting and preserving,” said Mike Ricci, the spokesman. And environmental groups quickly objected to the suit.

Oil, gas permits for seismic testing in Atlantic move ahead - Despite a recent announcement that plans to permit seismic testing off the East Coast were “indefinitely postponed,” the feds are still processing nine permits to test for offshore oil and gas drilling in the Atlantic, the Interior Secretary said recently.“There’s no legal impediment to developing a leasing plan,” Interior Secretary David Bernhardt said, according to a video of a National Resources Committee meeting shared by South Carolina Congressman Joe Cunningham.“I think we have up to nine permits in various stages of processing,” Bernhardt told the committee.“I have until 2022 to get a new plan in place. I have some time, so I’m going to figure out what I’m going to do and then I’ll do it,” he said. Last month, Trump administration officials said they were backing away “indefinitely” from plans that could lead to oil and gas drilling off the East Coast, the Wall Street Journal reported. They made that decision after a court ruling in March blocked drilling in the Arctic, the newspaper reported.In the recent congressional committee meeting, Cunningham told the interior secretary, “Here’s what I’m worried about — you have the next step of the plan which has South Carolina and Florida directly in its crosshairs.”“I think that this Administration and your office recognizes that this is electoral poison to put those on the map before the 2020 election. The court case in the Arctic is a convenient excuse to wait until that election passes, but the people of South Carolina are not going to be fooled by this,” he said.

A massive Gulf oil spill is finally being contained after more than 14 years - The U.S. Coast Guard said Thursday that it is finally containing and collecting oil from a massive 14-year spill in the Gulf of Mexico, the longest offshore disaster in U.S. history. More than 30,000 gallons of oil have been collected over several weeks since a containment system was installed about 12 miles off the coast of Louisiana, the Coast Guard said. Capt. Kristi Luttrell, who is overseeing work performed by a contractor, the Couvillion Group, called the containment a major milestone that could significantly reduce the impact of the spill, which will enter its 15th year in September. Luttrell entered into a contract with Couvillion last year after the company responsible for the spill, Taylor Energy, failed to follow her orders to do so on its own. The system’s success could be a serious setback to Taylor Energy’s efforts to stop the containment effort. The company filed a federal lawsuit in December, claiming that Couvillion lacked the expertise to install a system to capture oil leaking from its wells. They broke open when Hurricane Ivan caused the walls of a deep sea canyon to collapse and sink an oil platform. The analysis by Oscar Garcia-Pineda, a geoscience consultant who specializes in impacts from oil spills, estimated that 1.5 million to 3.5 million barrels spilled into the gulf from the Taylor Energy site over more than 14 years. Acting on that finding, as well as other scientific reports, the Coast Guard issued Taylor Energy an ultimatum to hire a company to build a device to contain the oil or face a fine of up to $40,000 per day. Weeks of monitoring by the Coast Guard shows that Couvillion’s containment system is working, Luttrell said Thursday. The system was completed and fully operational April 29, but Couvillion started collecting oil 12 days before that. The oil is pumped from deep-water storage tanks to a ship that brings it to shore to separate it from water. Oil that can be salvaged is sent to a licensed receiving facility, and the rest is recycled or disposed.

Oil sheen 'barely visible' at site of 14-year-old Gulf leak - A chronic sheen has become “barely visible” since government contractors installed a new underwater system for capturing and collecting crude at a site in the Gulf of Mexico where oil has been leaking for 14 years, a Coast Guard official said Thursday. A Coast Guard statement describes the installation of the subsea containment system as a “major milestone” in long-running efforts by the federal government to contain the leak. More than 30,000 gallons of oil has been recovered since the system began operating, government attorneys said in a court filing Tuesday. “After monitoring the system for several weeks we have determined that the system is meeting federal containment standards,” Capt. Kristi Luttrell said in the Coast Guard’s statement. “At this time the system is working and the once (predominantly) large surface sheen has been reduced to barely visible.” Taylor Energy Co. ultimately is responsible for ending the leak at the site 11 miles off Louisiana’s coast where one of its oil platforms toppled during a 2004 hurricane. The New Orleans-based company sued Luttrell in December, attempting to challenge her order in November to design and install a new system to capture and remove the crude before it forms slicks that often have stretched for miles. Taylor Energy “looks forward to receiving the information needed to confirm the Coast Guard’s statement, which, if accurate, is encouraging,” said a statement released Thursday by a company spokesman. Justice Department attorneys, who represent Luttrell in Taylor Energy’s federal suit, said in Tuesday’s court filing that the containment system’s collection tanks have been pumped three times and the recovered oil has been transported to shore. “Based on the amount of oil captured to date, the Coast Guard is preparing a standard operating procedure for containment operations and maintenance,” they wrote.

Exxon's GOM Sale Is Said to Draw Repsol, Ineos Interest - Exxon Mobil Corp. has drawn from Repsol SA and closely held U.K. petrochemical company Ineos Group Holdings in a package of oil fields it's selling in the Gulf of Mexico, according to people familiar with the matter. The assets could be worth as much as $1.5 billion, said one of the people, who asked not to be named because the talks are private. A sale to Spain’s Repsol would expand its existing position in the prolific offshore region, while for Ineos it would mark its debut as an oil and gas producer in the Gulf. The U.K. company already has petrochemical plants in the southern U.S. A sale agreement could be signed in as soon as month, the people said, although no deal has been agreed upon so far and the talks could still fall apart. Exxon, Ineos and Repsol declined to comment on the talks. Oil majors regularly shed assets as they become older and less material to their large balance sheets. Exxon said in October that it was "testing market interest" in a number of operated and non-operated producing assets in the Gulf.

U.S. Gasoline Traders Would Rather Export Than Ship to New York -- The busiest U.S. fuel pipeline is running below capacity, as Gulf Coast refiners get fatter margins exporting to Latin America than shipping to New York. Colonial Pipeline Co.’s Line 1, which carries as much as 1.37 million barrels a day of gasoline from the Houston area to North Carolina, has been full less than half the time this year, and not since March, according to shipper notices. The line, which feeds into another pipe running to New York Harbor, has been overfilled in April and May the past three years, Colonial data show. Demand from Latin American countries whose refineries aren’t able to meet domestic fuel demand, such as Mexico, has pulled supply from the Gulf Coast that would otherwise end up in Colonial. At the same time, readily available cargoes from eastern Canada and Europe have kept New York prices in check, even with stockpiles below normal. The arbitrage -- or profitability of buying fuel in the Gulf Coast and selling it in New York -- has been closed for most grades for long enough that less fuel is being shipped on the line, according to traders. Reformulated gasoline, or RBOB, in New York on Thursday was the weakest seasonally relative to the Gulf Coast in six years, data compiled by Bloomberg show. East Coast gasoline markets have been adequately served by refineries from Philadelphia north that were running near full capacity before the last few weeks, said Andy Lipow, president of Lipow Oil Associates LLC in Houston. More Gulf Coast and Midwest barrels are finding a path onto ships, he said. Twelve of 25 five-day cycles so far this year were allocated, which occurs when shippers want to move more fuel on the line than it can hold. When space is rationed, shippers can only move a percentage of what they want to. From 2013 to 2018, space on Colonial was rationed across several months, with traders paying hefty premiums to buy space from other shippers.  Shippers are paying their counterparts as much as 1.5 cents a gallon to take over their line space, according to a broker. That allows sellers to maintain their shipper histories with Colonial, which factors into how much they can transport when the line is overfilled and space is rationed. U.S. government data suggests East Coast gasoline prices should be higher. Stocks of RBOB were at an eight-month low last week, Energy Information Administration data showed. They would be lower, except that the region has been importing at least 12 cargoes a week. Ship-tracking and fixture data show interest remains high in cross-Atlantic shipments.

Crude Exporters Navigate Gulf Coast Terminal Constraints - U.S. crude exports out of the Gulf Coast averaged more than 2.4 MMb/d in the first four months of 2019 — using infrastructure that is increasingly constrained by a lack of deepwater ports. U.S. crude is reaching destinations worldwide, with large volumes traveling long distances to Asia on gargantuan 2-MMbbl vessels — Very Large Crude Carriers (VLCCs) — loaded offshore by ship-to-ship transfer. Shipments to Europe are primarily on smaller Suezmax and Aframax vessels. Overall, the increased marine activity is testing the limits of existing infrastructure. Today, we analyze the past 16 months of crude export vessel movements and their impacts on Gulf Coast ports. (We’ll also be discussing this and other critical trends related to U.S. export markets live and in person tomorrow at xPortcon in Houston.)  We’ve covered the development of U.S. crude exports extensively in the blogosphere since the ban on most overseas shipments was lifted in December 2015. Exports from the Gulf Coast are growing and expected to increase further as new pipelines from the Permian and Eagle Ford come online over the next two and a half years (see Hard Hat and a Hammer). In the less than four years since wide-open exporting began, the rapidly developing export market has overcome a number of challenges, like poor price transparency (see The Race is On) and the lack of deepwater terminals to load exports (see Rock The Boat). Actual shipments still require considerable logistical juggling as crude is loaded from smaller tankers onto long-distance VLCCs for voyages to Asia, as detailed in Berth In Reverse. And, as we’ve been discussing in our Slow Ride series, ports like the Houston Ship Channel are contending with increased congestion and the resulting difficulties in scheduling. Plans to expand the onshore ports — and build new deepwater terminals offshore — are in the works, but funding and executing on these projects is not easy and can take many years.

Russian Oil Sales to US on Steroids -- Petroleum exports from Russia to the U.S. are growing rapidly as the supplier takes advantage of lost deliveries from sanctions-hit Venezuela and supply cuts by OPEC members. In the first half of May, 13 ships from Russia delivered almost 5 million barrels of crude and oil products, according to a report by Caracas Capital Markets managing partner Russ Dallen. More supplies are en route, with American refiners set to triple their monthly intake of Russian crude, the largest foreign producer outside of OPEC. "Lately, Russian shipments coming to the U.S. seem to be on steroids." Through February, U.S. buyers received over 16 million barrels of crude and products, compared about 20 million for the same period last year. For all of 2018, shipments were about 137 million, according to EIA data.

Sanctions Are A Bitch – US Refiners Importing Russian Oil Like Mad - Luongo- It’s a headline so funny I literally ruined a keyboard spitting out my coffee yesterday. Working off a stub from Bloomberg, Sputnik took a lot of joy in amping up the irony. The market needs to be fed. And refiners will buy whoever has the best cargo at the best price. It is only politicians who don’t understand that you can’t dictate to the markets. Now refiners in the U.S. have been under pressure with rising oil prices but Russian oil isn’t brought in to supply the tight gasoline market. Russian Urals grade is considered heavy-sour which is better for refining into diesel and other heavier grades. And it is being sent right to the refineries that normally process Venezuela’s very heavy crude (PADD 3 – Gulf Coast). Don’t think for a second that this is some kind of Trumpian quid pro quo or anything. That he promised Putin a few ducats to look the other way in Venezuela. I know stupid libs of the Young Turk variety will think this. So will the Q-tards in the MAGA crowd.But, no. This is simply normal market action that a bunch of clueless morons in D.C. can’t control. Refiners need feedstock to refine or they go out of business. Russian Urals regularly trades at a discount to Brent crude because there is no good benchmark for it. Remember, both West Texas Intermediate and Brent are light-sweet grades.  Only the Dubai and Shanghai oil futures exchanges list contracts for deliveries of heavy sour. So, it’s no surprise to me to see it being a direct substitute for Venezuelan crude while the U.S. embargoes it.  If the Russians gain the market share lost by Venezuela while, at the same time, providing the financial infrastructure — payment clearing, insurance, etc. — for Venezuela to sell their oil to other markets, like India, what, in the end is the net effect of all this sanctioning and war-mongering?  Nothing, of course. But you can’t tell that to insane authoritarians like John Bolton. These are men who can only think in terms of primary effects and overly-discount the market’s ability to overcome obstacles. And so, they get frustrated by secondary effects, like the simple substitution of Russian oil for Venezuelan oil by domestic refiners.Wait a couple more months and you’ll see Ted Cruz (R – Exxon/Mobil) introduce new sanctions via CAATSA against the Russian shipping companies bringing the oil to the Gulf Coast as a matter of ‘national security.’He’ll be joined by Lindsay Graham and the rest of the braying Repuglican jackals and it’ll be used to force Trump to cave on some other issue of the day. You can’t reason with insane people. And the longer they are in power the more they force sane people to act stupidly to do rational business. We’ll see more stories like this as Trump’s war on markets continues until he either breaks them or they break him.

Louisiana Project's Price Tag Rises Again  | Rigzone - For the second time this year, Sasol Ltd. has raised the projected total capital cost of the world-scale ethane cracker and derivatives complex it is developing in Lake Charles, La.The overall cost estimate for Sasol’s Lake Charles Chemical Project (LCCP) now ranges from $12.6 to $12.9 billion, the South Africa-based company reported in a written statement emailed Wednesday to Rigzone. The estimate, which includes a $300 million contingency, represents an8.6- to 9.3-percent increase from the $11.6 to $11.8 billion revised cost range that Sasol reported in February of this year.“This increase in the anticipated LCCP capital costs is extremely disappointing,” Sasol said in its written statement. “Executive management has implemented several changes since February 2019 to further strengthen the oversight, leadership for the project and frequency of reporting.”  The firm noted that specific actions management has taken in recent months have included segregating duties between project controls and finance functions and assigning a senior vice president to oversee LCCP project controls. It added that it is implementing initiatives to improve decision-making, transparency and documentation within the project management team.“The new project leadership has been instrumental in identifying and remediating these issues,” stated Sasol. “The reviews and investigations initiated by management to date indicate that the underlying control weaknesses are limited to LCCP.” Despite the rising cost projection, Sasol also noted Wednesday that it still expects operating costs for LCCP – other than “slightly elevated during start-up” – to align with previous assumptions. Moreover, the company stated that the complex’s first derivative unit – linear low density polyethylene (LLDPE) – achieved beneficial operation on Feb. 13 of this year and that the plant is ramping up as expected. Other key project parameters the company reported Wednesday include:

  • 96 percent overall project completion at the end of March 2019, with 89 percent of construction completed and $11.4 billion spent on the project up to that point
  • Beneficial operation achieved for LCCP’s ethylene glycol (EG) unit, with the ethylene oxide (EO) unit expected to go online “in the coming days”
  • Beneficial operation expected in July 2019 for the ethane cracker
  • A one-month delay in beneficial operation for the last derivative plant (Guerbet unit) to February 2020.

Freeport LNG Clears FERC Hurdle - The Federal Energy Regulatory Commission (FERC) reported Thursday that it has approved the construction of the Train 4 expansion at the Freeport LNG export facility, located on Quintana Island near Freeport, Texas. As Rigzone reported earlier this week, the fourth train would boast 5 million tons per annum (mtpa) of liquefaction capacity and boost the LNG terminal’s export capacity to 20 mtpa. Freeport LNG has already named KBR, Inc. its preferred bidder for the Train 4 engineering, procurement, construction and commissioning contract. According to FERC, Thursday’s action represents the fourth LNG export project the commission has approved this year. In February, FERC authorized Venture Global LNG’s Calcasieu Pass project in Cameron Parish, La. Last month, it approved the Driftwood and Port Arthur projects in Louisiana and Texas, respectively. “I’m proud of the efforts by the commission and its staff to process today’s and our previous LNG orders,” FERC Chairman Neil Chatterjee said in a written statement. “Exporting LNG from the United States can help increase the availability of inexpensive, clean-burning fuel to our global allies who are looking for an efficient, affordable and environmentally friendly source of generation.” Following the FERC decision, Freeport LNG stated Thursday that it still needs to secure approval from the U.S. Department of Energy (DOE) to export Train 4 LNG volumes to non-Free Trade Agreement countries. The company added that it anticipates clearing that regulatory step later this quarter. Freeport LNG stated that it expects commercial startup of Train 1 to occur during the third quarter this year, with operations from the two subsequent trains by mid-2020. Train 4 is slated to begin operations in 2023, the company added. Customers that have signed 20-year tolling agreements for LNG from the Freeport facility include Osaka Gas Trading & Export, LLC, JERA Energy America, LLC, BP Energy Co., Toshiba America LNG Corp. and SK E&S LNG, LLC. In addition, Trafigura PTE Ltd. has signed a three-year sale and purchase agreement with Freeport LNG. 

Trade War Leaves LNG Mega Projects Vulnerable - The escalation of the trade war between the United States and China could jeopardize several LNG mega projects awaiting final approval. That’s according to Rystad Energy, which said increased tariffs will create additional headwinds for U.S. LNG projects currently awaiting final investment decisions. “Rystad Energy expects China to be one of the biggest contributors in sponsoring new LNG projects over the coming years, and there will be a reluctance to signing new deals with U.S. projects as long as this trade war persists,” Sindre Knutsson, senior analyst at Rystad Energy’s gas markets team, said in a company statement. “For example, Cheniere and Sinopec agreed late last year on a 20-year deal that would supply 2 million tons per annum of LNG to China starting in 2023. This deal could have been signed once the trade tensions were resolved, but due to the heightened tensions this has not happened,” Knutsson added. According to Rystad Energy, China’s decision to impose tariffs on U.S. LNG will make LNG projects outside the United States more attractive. On Monday, China’s ministry of finance revealed that the country would impose a 25 percent tariff on U.S. LNG from June 1. On May 10, the office of the United States trade representative revealed that the United States had increased the level of tariffs from 10 percent to 25 percent on approximately $200 billion worth of Chinese imports. According to a report published by DNV GL last month, the majority of LNG-focused oil and gas professionals believe several new LNG infrastructure projects will need to be initiated this year to ensure supply can meet demand after 2025.

LNG Players Weigh Ship Storage Gambit-- With so much cheap liquefied natural gas around, traders are again looking at tankers to store the fuel in the hope of better prices. A long-established practice in oil trading, the complexity and cost of keeping natural gas in liquid form on ships for extended periods meant it wasn’t widely used until last fall, in anticipation of a surge in Chinese demand and prices. That bet backfired when a mild winter damped requirements for the fuel, forcing traders to discharge LNG and release the vessels, which caused a crash in spot charter rates. While it’s a gamble as weather-driven demand is unpredictable, price signals indicate the option to store LNG in vessels later this year is again becoming attractive, not only in Asia, but also in Europe. The price premium for later contracts, or contango, is building up for both spot Asian LNG prices and the U.K. benchmark, leaving traders weighing how to profit should they choose to store gas at sea. “We could see a lot of floating LNG storage from September and this could also tighten shipping rates before winter,” Nick Boyes, a senior gas and LNG analyst at Swiss utility and trader Axpo Group, said by email. Given the price gap, and with an estimated cost of storing LNG of 60-75 U.S. cents a million British thermal units a month, “current freight rates allow for floating storage opportunities in September, October and November this year in both northeast Asia and Atlantic,” Boyes said. JKM futures for December are about $2.30 per million Btu higher than September contracts, or a premium of $7.6 million for a 3.3 trillion Btu cargo. How much profit can actually be made is strongly dependent on the cost of renting a tanker and of keeping the fuel in liquid form at minus 162 degrees Celsius (minus 260 degrees Fahrenheit).

Saudi oil giant Aramco strikes deal to buy US natural gas from Sempra Energy -Saudi Aramco has signed an agreement to buy U.S. liquefied natural gas from San Diego-based utility Sempra Energy, advancing the state-owned oil giant’s goal of becoming a player in the growing international gas market. Subsidiaries of the two companies, Sempra LNG and Aramco Services Company, announced on Wednesday that they’ve signed a heads of agreement, which sets up a deal that would see Sempra sell Aramco 5 million tons per year of LNG for the next 20 years. The agreement is subject to negotiation and finalization. “If converted to a sales and purchase agreement (SPA), this will be one of the largest LNG deals ever signed and the largest deal signed since 2013,” said Giles Farrer, research director at energy and minerals consultancy Wood Mackenzie. The supplies would come from the first phase of Sempra’s Port Arthur LNG facility in Texas, which is currently under development. The agreement will see Aramco make a 25% equity investment in the facility. The agreement is a major boost for Sempra, one of several companies trying to develop U.S. facilities to export LNG, or natural gas chilled to liquid form for transport. LNG developers need to line up customers in order to finance the multi-billion dollar export terminals, so the agreement with Aramco makes it more likely that Sempra will green light the Port Arthur facility. Sempra previously struck a 20-year deal to sell 2 million tons per year from Port Arthur to the Polish Oil and Gas Company. Once the Aramco deal is finalized, Sempra will have locked in buyers for 7 million tons of Port Arthur’s 11 million tons per year of capacity.

Dallas Fed: Shale gains bring U.S. oil breakeven price down to $50 a barrel - The cost of profitably drilling a shale oil well in the U.S. has fallen to a modern low of $50 per barrel, likely ensuring the growth of the onshore shale industry for years to come, according to the latest survey by the Federal Reserve Bank of Dallas. Led by surging production and efficiency gains in West Texas' booming Permian Basin, the average breakeven price of oil has fallen 4 percent - or $2 per barrel - during the past year down to the $50 threshold, the Dallas Fed said.The rising production from increasing shale plays and cost reductions should also stop crude oil prices from rising too high, keeping crude oil prices trading in a narrow range for the foreseeable future.The U.S. oil benchmark is currently hovering near $63 per barrel.Anything above $60 is considered relatively healthy for the industry, although most energy companies would still prefer higher pricing.That same breakeven price was closer to $75 a barrel back in 2014 when oil prices last exceeded $100 per barrel.There are only about half of the oil drilling rigs in service from the fall 2014 peak - just before the most recent oil crash. However, rigs today are able to drill more wells from single sites than before and to deeper depths to produce more oil and gas. That's largely why the U.S. is producing record volumes of crude oil and natural gas."Horizontal drilling and hydraulic fracturing have made accessible significant amounts of oil reserves previously considered uneconomical to develop," the Dallas Fed report contended. "Moreover, production costs for those reserves have declined dramatically over the past 10 years."  "As a result, larger quantities of oil are economical to produce at much lower prices than would have been possible before," the report concluded.

Don't look to Texas on energy deregulation -- If President Trump wants to know what a deregulated energy future looks like, he doesn’t have to look any further than Texas. The president believes ending protections for workers and the environment will help big business thrive. Not surprisingly, this view looks pretty good to the billionaires he surrounds himself with.   But in the Houston area this spring, our own view has been obscured by plumes of dark smoke rising from three major industrial fires. We’re seeing up close how a lack of industrial regulation damages communities and ecosystems. It is short-sighted and, in the long run, hurts everyone. On March 16, a fire ignited at the ExxonMobil Refinery in Baytown, Texas, worrying the local community. A day later, on March 17, another fire broke out at the Intercontinental Terminal facility near Deer Park, Texas. It raged for days, casting a massive plume of toxic smoke over the region. Dark soot and firefighting foam fell from the sky onto nearby communities. A dike breach sent toxic chemicals and foam into the Tucker Bayou and the Houston Ship Channel, killing fish, birds, opossums and turtles. Houston Ship Channel traffic stopped for nearly a week, causing an estimated $1 billion in economic losses. As if that weren’t bad enough, on April 2 — less than two weeks after the ITC fire — a chemical tank at the KMCO plant in Crosby ignited, once again sending a toxic plume of smoke into the air. Tragically, this blaze killed one KMCO plant worker and injured 10 others.   One might think that Texas closely regulates these dangerous plants in Houston’s petrochemical corridor. That is not the case. The Texas Commission on Environmental Quality refers to the industry it regulates as its “customers,” and it spends more time writing permits for those customers than it does conducting inspections or issuing violations. This is why the fertilizer plant in West, Texas that exploded in 2013, killing 15 people, hadn’t been inspected in years. It’s why the ITC site in Deer Park is still unsafe for the public weeks later. The Texas Commission on Environmental Quality does not have authority to regulate above ground storage tanks. Local fire marshals typically don’t write performance standards for petroleum storage tanks into fire codes. This could explain why a fire in one tank at the ITC facility ultimately spread to 13 tanks.  This hands-off approach by state regulators is why the KMCO plant in Crosby continued to operate, and eventually erupted into a deadly fire, despite a long list of environmental violations, including being criminally convicted of two counts of knowingly violating the Clean Air Act in 2016. The Texas Commission on Environmental Quality has fined the company about $150,000 for multiple violations since 2009, but that amounts to a light slap on the wrist for a multi-million dollar energy company.

Texas Bill Would Make Protesting Pipelines a Felony on Par With Attempted Murder -A bill making its way through the Texas legislature would make protesting pipelines a third-degree felony, the same as attempted murder.  H.B. 3557, which is under consideration in the state Senate after passing the state House earlier this month, ups penalties for interfering in energy infrastructure construction by making the protests a felony. Sentences would range from two to 10 years. The legislation was authored by Republican state Rep. Chris Paddie. It passed the state House May 7 on a 99 to 45 vote, with two abstentions. The bill is being cosponsored in the state Senate by Republican state Sen. Pat Fallon. In remarks on the state House floor during the bill's passage, Paddie sought to assuage the fears of those who believe the legislation will target non-violent protest. "This bill does not affect those who choose to peacefully protest for any reason," said Paddie. "It attaches liability to those who potentially damage or destroy critical infrastructure facilities." But opponents of the measure don't agree, pointing to the bill's language. "It's an anti-protest bill, favoring the fossil fuel industry, favoring corporations over people," Frankie Orona, executive director of the Society of Native Nations, told the Austin American-Statesman. The legislation is "is criminalizing conscientious, caring people who are the canaries for their communities," activist Lori Glover told the Texas Observer.  The Texas bill is just the latest piece of legislation at the state level to target pipeline protests. In the wake of a spike in anti-pipeline actions over the past few years, Grist reported Tuesday, a number of states have come down on environmental activists.

Outrage as Texas Senate Passes ‘Unconstitutional’ Bill That Would Hit Pipeline Protestors With Up to 10 Years in Prison - Sparking outcry from indigenous tribes and environmental groups, the Texas state Senate on Monday passed industry-backed Republican legislation that would hit pipeline protestors with a third-degree felony and up to ten years in prison."Here in Texas, members of the legislative body are looking to pass laws that harshly criminalize free speech and the right to protest," Juan Mancias, Tribal Elder with the Carrizo Comecrudo Tribe of Texas, said in a statement. As the Associated Press reported, the bill "would classify pipelines as critical infrastructure, putting them in the same category as power plants and water treatment facilities."According to the AP, the "amended bill would still subject those who trespass and damage the facility to a third degree felony with up to 10 years in prison," a sentence on par with the punishment for attempted murder."But people impairing or interrupting operations would now face a misdemeanor with a fine up to $10,000 and potentially up to one year in jail," the AP reported.As Common Dreams reported, the Texas House passed the legislation earlier this month.Republican state Rep. Chris Paddie, the author of the bill, insisted that his legislation would not punish peaceful demonstrators, but indigenous leaders at the front of the fight against climate-destroying pipelines in Texas weren't buying it."We are at a tipping point as our ecosystems decline at accelerated rates and instead of protecting our environment, we are protecting big oil and pipelines," Jennifer K. Falcon, campaign manager with Society of Native Nations, said in a statement. "Across the country, we have seen these bill challenged for stripping us of our constitutional rights." Dallas Goldtooth of the Indigenous Environmental Network vowed to fight the Texas bill and other similar Republican legislation across the country. "Big oil is hijacking our legislative system," Goldtooth said. "Our Network is suing the state of South Dakota for passing a bill similar to the one being debated in Texas. Both are unconstitutional attempts to suppress public protest and are nothing but fear tactics. We will continue to support and fight beside the indigenous communities in Texas to make sure these unconstitutional laws do not stand."

States Crack Down on Environmental Activists | Sierra Club - On May 7, Texas state legislators approved legislation that imposes harsh criminal penalties for protest around critical infrastructure projects. Under the rule, actual damage or intent to damage critical infrastructure now includes peaceful process, so long as the protest interrupts operations.  This legislation is among a raft of new and pending legislation that, environmental and civil liberties groups say, are designed to discourage people from opposing controversial infrastructure projects. In Oklahoma, individuals who protest pipelines can now be smacked with a $100,000 fine and 10 years in prison. In Louisiana, activists who make “unauthorized entry of a critical infrastructure” such as oil pipelines face a punishment of up to five years' imprisonment and a $1,000 fine. And legislators in North Dakota last March passed a law under which interfering with pipeline construction becomes a felony punishable by up to five years in prison and a $10,000 fine; groups “conspiring” with such protest could be criminally liable for 10 times that fine.   Thirty five states have considered or enacted legislation restricting the right to protest. At least eight of those bills were introduced this year, with 12 laws now on the books Iowa, Louisiana, and Oklahoma. Illinois, Indiana, Idaho, and Texas have pending legislation that would make protest near “crucial infrastructure” punishable by fines and prison time. (A full accounting of such laws can be found at Protest Law Tracker.)  While the severity of the new protest penalties ranges on a spectrum, one common thread in many is punishment for interference in fossil fuel infrastructure. Two particularly far-reaching rules signed into law in Oklahoma and South Dakota earlier this year make it illegal to engage in what’s called “riot boosting”—an amorphous term that includes not only protesters themselves but also anyone who “directs, advises, encourages, or solicits other persons participating,” in the words of the Oklahoma law. Groups or individuals found to be breaking the law would be liable for three times the cost of any damages incurred to corporate or government property. In 2017, South Dakota leaders established a law that curtailed protests on public lands and restricted protests that obstruct traffic. In March 2019, state legislators went further, expanding punitive measures for “riot boosting.” Under the new law, organizations or persons not directly involved in a protest but found to act “through any employee, agent, or subsidiary” can also be held liable. Proposed bills in North Carolina, North Dakota, Florida, Texas, and Tennessee would make it legal to hit protestors with a car, as long as the driver didn’t do so intentionally.

U.S. crude inventories jump surprising 4.7 Mmbbl - U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 4.7 million barrels during the week ended May 17, vs. expectations for a 600,000-barrel drop, the Energy Information Administration said Wednesday.In the week ended May 10, crude inventories rose by 5.4 Mmbbl. The second-straight weekly build of roughly 5 Mmbbl seemed largely due to weak refining activity, an unusual occurrence this time of year, as gasoline makers typically are pushing out as much of the motor fuel as possible in anticipation of the start of the summer driving season, Kallanish Energy learns.Refineries operated at 89.9% of their operable capacity last week, EIA said. The average for this time of year would be at least 90%.  EIA also said total motor gasoline stockpiles increased by 3.7 Mmbbl during the week ended May 17, vs. forecasts for a drop of nearly 816,000 Bbls. In the May 10 data, gasoline inventories fell by 1.1 Mmbbl.Distillate fuel inventories rose by 800,000 Bbls last week vs. expectations for a drop of 48,000 Bbls. In the previous week, distillate stockpiles rose by 84,000 Bbls. Gasoline production decreased last week, averaging 9.9 million barrels per day (Mmbpd), EIA said. Distillate fuel production also fell last week, averaging 5.2 Mmbpd.

US shale on track to 16% oil growth in 2019 -- US shale operators are on course to increase oil production significantly in 2019. The growth in US onshore production from the first quarter through the fourth quarter could come in at around 1.1-1.2 million barrels per day (bpd), or 16% for the full year, according to Rystad Energy. After a paltry first quarter, depressed by weather effects, US shale players have over the past weeks assured investors that they will achieve previously communicated production targets, as well as demonstrate excellent capital discipline and cost control. “Despite temporary challenges faced in the beginning of the year, E&P companies are set to deliver on their original production and capital targets, with some being well positioned to perform above initial expectations. US shale players can still be expected to deliver around 16% oil growth in 2019. Several operators have in fact raised their production guidance for the remainder of the year,” says Veronika Akulinitseva, senior analyst at Rystad Energy. Rystad Energy has analyzed the first quarter results of around 50 US shale operators. The results indicate that US producers, on average, saw a slowdown in oil production growth in the first quarter. Output grew by 0.1% relative to the fourth quarter of 2018. “The slow first quarter implies an even steeper expected growth curve for the remainder of the year. In fact, acceleration of oil production for many operators is already underway and oil additions are thus likely to increase notably already in the second quarter of 2019,” Akulinitseva remarked. The Canadian operator Enerplus was the player that raised its oil guidance the most, expecting 10% higher volumes than originally guided. It said growth is already underway and the company is aiming to generate a double-digit rise in production already in the second quarter. Likewise, SRC Energy, an independent operator in the Denver-Julesburg basin, raised its oil target by 7%, attributing the adjustment to overly conservative original guiding. 

Midwest Flooding Exposes Another Oil Pipeline Risk — on Keystone XL’s Route - — Standing on the banks of the Keya Paha River where it cuts through his farm, Bob Allpress points across a flat expanse of sand to where a critical shut-off valve is supposed to rise from the Keystone XL pipeline once it's buried in his land. The Keya Paha flooded several weeks ago, and when it did, the rush of newly melted water drove debris, sand and huge chunks of ice deep inland, mowing down trees and depositing a long wall of ice 6 feet high and 30 feet wide across Allpress's property.  "It would've taken out their shut-off valve," Allpress said of the river flooding. "Right where they propose to put it at. And it wouldn't have been a good thing." If the Trump administration and the state of Nebraska have their way, the Keystone XLoil pipeline will be built, and about a mile of it will slice through Allpress's 900-acre farm, where he and his brothers raise corn, alfalfa and cattle.   A former oil-field worker and avowed Republican, Allpress, like many local landowners, has long opposed the pipeline, which would pass through floodplains and erosion-prone land. Now, the catastrophic spring flooding that devastated parts of Nebraska has swept that threat into the spotlight, as the Trump administration works to fast-track construction by overriding environmental reviews. Opponents of Keystone XL have successfully stymied the project's completion for years with legal challenges over threats to regional drinking-water aquifers, streams, wildlife habitat and the global climate. The pipeline would carry tar sands crude 1,200 miles from Hardisty, Canada, to Steele City, Nebraska, where it would connect to other pipelines to Gulf Coast refineries. Without adequate environmental review, grave risks such as flooding and erosion "haven't been analyzed and the pipeline is going to go forward without agencies fully understanding risks and threats to the project," said Doug Hayes, a lawyer for the Sierra Club, which is a plaintiff in the suits.

Regulators Could Delay Dozens of Fracking Projects as Rule Making Begins  -Dozens of proposed fracking projects in north metro Denver and beyond could be put on hold for a year or more while regulators implement the state’s new oil and gas law.The Colorado Oil and Gas Conservation Commission announced today, May 16, that it has finalized its “Objective Criteria” identifying which drilling permits will be subject to additional review by agency director Jeff Robbins during what is expected to be a lengthy rule-making process.The final list gives Robbins and his staff broad authority to delay the approval of permits that meet any one of sixteen criteria, including applications to drill within any municipality, within 1,500 feet of an occupied building, and within floodplains and protected wildlife areas.,While many proposed drilling sites across the state, particularly those in rural Weld County, won't run afoul of the criteria, the agency's decision could further delay or block the approval of controversial projects in dense residential areas along the Front Range, including in Aurora, Broomfield, Commerce City and elsewhere.It’s the first major — albeit temporary — policy shift in the new era of Colorado oil and gas law that has dawned following the passage of Senate Bill 181, the sweeping package of reforms signed into law by Governor Jared Polis last month.  “The finalization of the criteria is an important first step in implementing the new law and incorporating its public health, safety, welfare, environmental, and wildlife considerations,” Robbins said in a statement.SB 181 gives Robbins the authority to delay the consideration of certain permit applications that "require additional analysis" to protect health and safety until a new, permanent set of protections required by the bill are put in place by COGCC regulators.

Colorado Oil and Gas Regulators Reject Calls for Full Drilling Moratorium Environmental activists are urging a newly appointed board of Colorado oil and gas regulators to increase health and safety protections following the passage of a landmark bill to reform state drilling laws. But this new era of Colorado energy policy has kicked off with familiar results — with state officials rejecting calls to halt or substantially slow fossil-fuel development.The Colorado Oil and Gas Conservation Commission won't impose a moratorium on permitting while it conducts rule-making required by the newly enacted Senate Bill 181, agency director Jeff Robbins said at a hearing today, May 21.“Numerous members of the public have asked this commission to immediately put in place a moratorium on any and all new permits until all of the rules have been adopted,” Robbins said as the hearing began. “That, I believe, is contrary to the intent of Senate Bill 181.”The hearing was the first regularly scheduled COGCC hearing since SB 181 was signed into law last month, and the first under a new commission appointed by Governor Jared Polis to comply with the law's requirements, which altered the commission's makeup to increase representation from health and environmental experts.For months, activists have called on Polis’s administration to “pause the permits” while new regulations are developed, and they’ve renewed those demands in the weeks following SB 181’s passage. The new law directs the COGCC to conduct rule-making relating to at least twelve different areas of oil and gas policy, a process that is expected to take well over a year to complete.“How can they proceed with any permitting at all?” asks Micah Parkin, executive director of 350 Colorado. “Whether or not [SB 181] calls for a moratorium, it obligates them to regulate in a manner that protects public health, safety, welfare, the environment and wildlife. How can they continue to move forward with any permitting until that’s been shown?”

California gasoline prices increase following refinery outages and declining inventories -  In early May, the California retail gasoline price averaged $4.01 per gallon (gal), surpassing the $4/gal mark for the first time since 2014. By comparison, the U.S. retail gasoline price averaged $2.90/gal. Much of the recent increase in California’s gasoline prices is attributable to refinery outages—both planned and unplanned—and falling gasoline inventories in the region. Since the beginning of 2019, the price of gasoline in California has increased by $0.75/gal. During the same period, the price of Brent crude oil, the primary driver of U.S. gasoline prices, has only increased by $0.52/gal, implying that other factors specific to California and the West Coast region have contributed to price increases. Beginning in March 2019, gross refinery inputs in the West Coast (the Petroleum Administration for Defense District (PADD) that includes California) began to rapidly decline. By mid-April, the four-week average of regional refinery runs reached 2.37 million barrels per day (b/d), a rate 9% lower than the previous five-year average. Weekly refinery runs have increased slightly since mid-April, possibly indicating that some refineries in the region are returning to operation.  Planned refinery outages typically do not drive large price increases, but unplanned outages can, especially in tightly balanced markets such as the West Coast. According to trade press reports, unplanned outages in the West Coast region include a shutdown in March as a result of emissions issues at a Valero refinery in Benicia, California, and shutdowns in March and in May as a result of two separate fires at a Phillips 66 refinery in Carson, California. Withdrawals from regional inventories of gasoline are being used to compensate for lower refinery production of gasoline. West Coast gasoline inventories fell to 26.4 million barrels, or 8% lower than the five-year average for the week ending May 10. West Coast gasoline inventories typically decline in the spring, but this year’s decline was greater than normal. As of May 15, 2019, West Coast gasoline inventories were within about 600,000 barrels of their lowest point in the previous five years. Inventories increased by 1.3 million barrels in the following week.

Fracking suspension remains following Sylvan Lake-area earthquake --More than two months after an earthquake near Sylvan Lake, a ban on so-called fracking remains in place as authorities seek to determine if the tremors were caused by oilfield drilling. On March 4, residents in the area were shaken by a 4.6-magnitude quake near where Vesta Energy had been conducting hydraulic fracturing, a process that involves pumping liquids into geological formations to free oil and gas deposits. In locales in that region deemed low risk for seismic, the company has been given a green light to resume limited operations, as long as it provides a hazard-assessment plan, said Alberta Energy Regulator (AER) spokeswoman Natalie Brodych. “All other fracturing sites remain suspended,” she added in an email. Vesta, she said, has yet to provide a risk assessment and mitigation plan that would permit it to resume operations in the low-risk zones, Brodych said. “Vesta is only permitted to perform surface construction, not resume operations, at their suspended sites,” she said. In the meantime, the AER and Alberta Geological Survey (AGS) are still conducting a review of the March 4 incident to determine if it was caused by fracking. “We have to compare passive seismic data, which is regular land movement, to the earthquake that happened,” said Brodych. The AER couldn’t say how long the suspension would last or when its review of the earthquake would be completed.

Montney Play Output to Hit 20Bcfe Per Day - Total production in Canada's Montney play will likely reach 10 billion cubic feet equivalent per day this year, according to Wood Mackenzie. Total production in Canada’s Montney play will likely reach 10 billion cubic feet equivalent per day (Bcfe/d) this year, according to Wood Mackenzie (WoodMac). WoodMac, which highlighted that the figure would mark an increase of 16 percent from 2018, added that output from the play is forecasted to rise to 20 Bcfe/d by 2030. Much of the forecasted growth is being driven by the rising liquids yield across various sub-plays within Montney, according to WoodMac, which said liquids production is expected to increase by 26 percent in 2019. "Montney specialists have made major headway on improving completion design and are being rewarded with operational performance. Liquids is driving the story,” Nathan Nemeth, senior analyst at WoodMac, said in a company statement. WoodMac highlighted that drilling activity from 2010-2014 was led by operators with LNG export aspirations. The company added that from 2015, activity has been led by operators targeting natural gas liquids, specifically condensate. The remaining value of the play is estimated to be over $48.3 billion (C$65 billion). The Montney formation is roughly located in northeast British Columbia, south of Fort Nelson and spread into northwest Alberta past Grande Prairie. The potential for unconventional petroleum in the Montney formation is estimated to be “very large” with expected volumes of 449 trillion cubic feet of marketable natural gas, 14.5 billion barrels of marketable natural gas liquids and 1.1 billion barrels of marketable oil, according to Canada’s National Energy Board.

North Sea Oil Production Struggling - North Sea oil production is struggling, according to independent energy research and intelligence business Rystad Energy. The company’s North Sea oil output forecast - which looks at crude and lease condensate production, including onshore, for Norway, the United Kingdom, Denmark and the Netherlands – projects that 185,000 barrels per day (bpd) of outages will be seen in May. Rystad Energy’s forecast also shows that 462,000 bpd of outages will be seen in June and reveals that further outages are set for July, August and September. Production is set to hit 2.526 million bpd in May, 2.275 million bpd in June, 2.660 million bpd in July, 2.457 million bpd in August and 2.453 million bpd in September, according to the forecast. “Currently we see unplanned outages at Oseberg and Flotta with combined impact of 160,000 bpd,” Rystad Energy said in a company statement posted on its website. “Furthermore, the North Sea is heading into maintenance season. We forecast North Sea oil production to drop next month to the lowest level since August 2014 as Ekofisk goes into maintenance,” Rystad Energy added. “Turnaround activity at Ekofisk feeding fields is the primary driver accounting for 230,000 bpd of the total outage for June 2019,” the company continued. Back in March, Rystad Energy revealed that oil production in the North Sea would drop by 330,000 bpd month-on-month in June as Ekofisk closed for planned work. Ekofisk was Norway's first producing field, according to operator ConocoPhillips Norway. The field was discovered in 1969 and production started in 1971.

US energy secretary: Sanctions bill on Nord Stream 2 coming soon - United States Energy Secretary Rick Perry said on Tuesday that a sanctions bill putting onerous restrictions on companies involved in the Nord Stream 2 project would come in the “not too distant future”. The Nord Stream 2 gas pipeline project has come under fire from the United States and several eastern European, Nordic and Baltic Sea countries which fear it will increase the European Union’s reliance on Russian gas. “The opposition to Nord Stream 2 is still very much alive and well in the United States,” Perry told a briefing on a visit to Kiev for the inauguration of President Volodymyr Zelenskiy. “The United States Senate is going to pass a bill, the House is going to approve it, and it’s going to go to the President and he’s going to sign it, that is going to put sanctions on Nord Stream 2.”

Nord Stream 2 explained: What it is and why it's proving controversial - Depending on who you ask, Nord Stream 2 is either a sustainable way to ensure European energy security or a proxy for Russian hybrid warfare.With construction underway and as Germany attempts to downplay criticism of the project, concerns over security and geopolitics remain.United States Energy Secretary Rick Perry said Tuesday that a sanctions bill putting restrictions on companies involved in the project would come in the “not too distant future.” Nord Stream 2 is a pipeline currently under construction from Russia to Germany via the Baltic Sea. The new pipeline will run alongside the already constructed Nord Stream and will double the amount of gas being funneled through the Baltics to 110 billion cubic meters per year.Estimated to become operational in early 2020, the pipeline is intended to provide Europe with a sustainable gas supply while providing Russia with more direct access to the European gas market. But as tensions between Russia and the West reach their highest in decades, many are skeptical of the purely economic reasoning attributed to the project.  Germany finds itself in a precarious position. Oil and gas are the lifeblood of Germany’s manufacturing economy, but the country produces very little energy domestically and is dependent on imports for 98% of its oil and 92% of its gas supply. As of 2015, Russia already supplied the plurality of its oil and gas (40% and 35% respectively), so it was with no great surprise that plans to increase Russia’s presence were met with hostility on both sides of the Atlantic. The core concern centers around Germany’s dependence on Russian energy which could make it susceptible to exploitation and more vulnerable to interference.  In fact, U.S. Congress and the European Parliament passed resolutions calling for an end to construction of the pipeline, citing Russian dependence as a threat to the common market and the EU’s strategic interests. Germany, Europe’s biggest natural gas consumer, has made efforts to downplay the relevance of Russian energy on the nation’s security. German Defense Minister Ursula von der Leyen has previously told CNBC that the country is not too concerned over security risks, arguing that it will sufficiently diversify their imports.

Oil Traders Start Work of Cleaning Russian Cargoes-- Oil traders are starting the slow process of cleaning up cargoes of Russian crude that were loaded onto tankers at a port in the Baltic Sea during a contamination crisis. Doing so will involve cargo transfers on the high seas, shipping barrels thousands of miles, and -- finally -- careful dilution to avoid damaging oil refineries. Almost 10 million barrels of crude were loaded at Ust-Luga around the time the contamination crisis came to light late last month. Much of the supply, most of which would normally be delivered locally, has been sitting on ships in northwest Europe ever since, while the companies that bought the cargoes -- including Glencore Plc and Vitol Group -- figured out what to do. Now, several of those same vessels have begun heading to dedicated cargo-transfer sites off the coasts of Denmark and the U.K. to discharge their consignments onto bigger supertankers more suited to long-haul trades. From there, traders and industry officials anticipate the barrels flowing to Asian destinations including China, where the cargoes will be carefully drip-fed into the refining system. The voyage, roughly 12,500 nautical miles, will take about 45 days. Refinery officials in Asia say that the barrels in question are likely to be diluted with 10 to 12 times more uncontaminated crude to avoid the plants becoming damaged. Some traders have speculated that some cargoes might even be used by power plants in Saudi Arabia, a move that would free up more of the kingdom’s crude for export this summer.

Venezuelan crude oil production falls to lowest level since January 2003 – EIA - In April 2019, Venezuela's crude oil production averaged 830,000 barrels per day (b/d), down from 1.2 million b/d at the beginning of the year, according to EIA’s May 2019 Short-Term Energy Outlook. This average is the lowest level since January 2003, when a nationwide strike and civil unrest largely brought the operations of Venezuela's state oil company, PetrĂ³leos de Venezuela, S.A. (PdVSA), to a halt. Widespread power outages, mismanagementof the country's oil industry, and U.S. sanctions directed at Venezuela's energy sector and PdVSA have all contributed to the recent declines. Venezuela’s oil production has decreased significantly over the last three years. Production declines accelerated in 2018, decreasing by an average of 33,000 b/d each month in 2018, and the rate of decline increased to an average of over 135,000 b/d per month in the first quarter of 2019. The number of active oil rigs—an indicator of future oil production—also fell from nearly 70 rigs in the first quarter of 2016 to 24 rigs in the first quarter of 2019. The declines in Venezuelan crude oil production will have limited effects on the United States, as U.S. imports of Venezuelan crude oil have decreased over the last several years. EIA estimates that U.S. crude oil imports from Venezuela in 2018 averaged 505,000 b/d and were the lowest since 1989.EIA expects Venezuela's crude oil production to continue decreasing in 2019, and declines may accelerate as sanctions-related deadlines pass. These deadlines include provisions that third-party entities using the U.S. financial system stop transactions with PdVSA by April 28 and that U.S. companies, including oil service companies, involved in the oil sector must cease operations in Venezuela by July 27. Venezuela's chronic shortage of workers across the industry and the departure of U.S. oilfield service companies, among other factors, will contribute to a further decrease in production.Additionally, U.S. sanctions, as outlined in the January 25, 2019 Executive Order 13857, immediately banned U.S. exports of petroleum products—including unfinished oils that are blended with Venezuela's heavy crude oil for processing—to Venezuela. The Executive Order also required payments for PdVSA-owned petroleum and petroleum products to be placed into an escrow account inaccessible by the company. Preliminary weekly estimates indicate a significant decline in U.S. crude oil imports from Venezuela in February and March, as without direct access to cash payments, PdVSA had little reason to export crude oil to the United States. India, China, and some European countries continued to receive Venezuela's crude oil, according to data published by ClipperData Inc. Venezuela is likely keeping some crude oil cargoes intended for exports in floating storageuntil it finds buyers for the cargoes.

Farmers show their determination against shale gas – Agri SA - The Supreme Court of Appeal in Bloemfontein heard arguments last week by Agri SA's provincial affiliate, Agri Eastern Cape, regarding the legality of technical regulations for fracking previously promulgated by the Minister of Mineral Resources. “In the absence of satisfactory information about the availability and treatment of water to sustain a fracking and shale gas industry in South Africa, Agri SA cannot support government’s apparent appetite for a full-scale gas industry in this country” says Janse Rabie, Agri SA’s Head of Natural Resources. The Department of Mineral Resources has approached the Appeal Court after Agri Eastern Cape, together with a group of interested landowners, were victorious in the Grahamstown High Court in Makhanda in October 2017 when Judge Gerald Bloem found that only the Minister of Environmental Affairs had the powers to make such regulations. Agri Eastern Cape opposes the Department's appeal. "Farmers and landowners in the Karoo have been fighting against planned shale gas developments in the Karoo and elsewhere in the country since January 2009. The case is proof of farmers' determination to remain resolute against fracking after more than a decade." "One must have stamina to withstand these international oil companies," said attorney Derek Light, who acts on behalf of Agri Eastern Cape. "I have the greatest respect for farmers and their representative bodies for their decision to protect agriculture, workers and food security." The Appeal Court has reserved judgment in the matter. 

Red Flag For Oil Markets- Asian Refining Margins Plunge To 16-Year Low --Persistent pressure on profit margins has forced Asian refiners to start considering a reduction in their run rates, Reuters reports, citing unnamed sources from the industry. According to the sources, higher international oil prices are behind the unfavorable development, which has seen refiners’ margins drop to the lowest since the spring of 2003, according to Reuters data.Among the refiners considering run rate cuts are South Korea’s SK Energy, the Singapore Refinery Company, and at least one refiner in Thailand. Some Chinese independent refiners are already running at less than 50 percent of capacity because of the pressure on margins, one Chinese analyst told Reuters.International oil prices have risen since the start of the year on the back of OPEC+ production cuts, which has combined with U.S. sanctions on Venezuela and Iran to shrink supply. The recent spike in U.S.-Iran tensions has also been bullish for prices. Interestingly enough, even so, over the past month both Brent and West Texas Intermediate have generally trended lower despite several spikes. However, this decline has not been enough to push Asian refiners’ margins higher. There may be another reason for this, too: a fuel glut coming from China. An increase in refining capacity, particularly from the independent refiners, also called teapots, and another increase in oil product export quotas have seen a substantial increase in the availability of Chinese oil products in the region, and this increase has added its own pressure to refining margins. Despite the glut and despite their run rate cuts, Chinese refiners will be processing even more crude this year: earlier this week Beijing allocated a new round of oil product export quotas and they were higher than the respective quotas last year. Since the start of the year, total oil product export quotas have hit 50 million tons.

China's CNPC breaks into Myanmar fuel retailing with Singapore brand (Reuters) - China National Petroleum Corp is planning to open dozens of petrol stations in Myanmar, the first major foreign investor to enter the fast-growing Southeast Asian fuel market, as the state giant expands its retail oil business, company officials said.Singapore Petroleum Company Ltd a petrol station owned by PetroChina, China's top energy group which became the first major foreign investor in Yangon, Myanmar, May 9, 2019. REUTERS/Ann WangThe investment, which could eventually reach tens of millions of dollars, follows a new strategy to tap overseas retail margins as China’s domestic fuel market is saturated. The move follows a similar but larger investment in Brazil, where CNPC’s global trading and refining unit bought 30% of a leading Brazilian fuel dealer last year.CNPC’s external retailing push came after Tian Jinghui, a veteran fuel marketing executive took the helm at the global unit, PetroChina International, which is also handling the Myanmar investment.CNPC sees Myanmar as a prime frontier market for fuel retailing, where foreign participation is minimal but demand is growing at about 10% annually on a fast-expanding vehicle fleet and barely existent local refining industry. “Myanmar is one of the few markets in this region that’s open to outside investment and where demand is growing fast,” said a Beijing-based PetroChina executive with direct knowledge of the investment. Officials declined to be named because they are not authorized to speak to press.

Why China’s Fracking Hopes Will Hit the Rocks – Could China’s oil and gas industry be on the brink of a revolution?   That’s one interpretation of the government’s shakeup of regulations on petroleum production this month. The introduction of drill-it-or-lose-it rules and a possible extension of subsidies for unconventional gas output could end up dismembering sprawling industry leader PetroChina Co. and creating a new sector of independent upstream producers like those that have transformed the U.S. energy industry over the past decade, according to Laban Yu, a Hong Kong-based analyst at Jefferies LLC.   That would be great news for Beijing. China overtook the U.S. as the world’s largest importer of crude last year, a headache for a country that’s long fretted about its dependence on imported raw materials. It’s hard to believe that would have happened had oil production roughly doubled over the past decade (as it did in the U.S.) instead of standing still.The question is whether radical change is a realistic prospect. After all, China’s oil and gas companies have hardly been sitting passively on their land holdings. About 64 percent of PetroChina’s net acreage was under development at the end of 2017, making it look more like an entrepreneurial wildcatter than the likes of Total SA, BP Plc and Exxon Mobil Corp., which typically have wells drilled on 10 percent or less of their leases. Nor has it been left behind by the revolution in unconventional oil and gas. Indeed, almost half the wells that PetroChina drills each year are in the Changqing field, an area near the Mongolian border characterized by impermeable rock, horizontal bore holes and all the usual features of the fracking revolution. Why, then, has production failed to take off? The best explanation isn’t that the country’s big three oil companies are an oligopoly — though they are — but that China’s geology is fundamentally more difficult than that of North America. Many prospective fields are buried deep below the surface. To make matters worse, they’re often riven with seismic faults from the slow collision of continental plates that have built the Himalayas and the Japanese and Philippine island chains. It’s in many ways a miracle that China produces any unconventional petroleum at all, and even a prized asset like Changqing can’t always count on making a profit. PetroChina’s agreement this week to buy 3.4 million metric tons a year of liquefied natural gas from Qatargas Operating Co. is in many ways an admission of defeat: If it can’t meet the government’s output targets on its own, it can at least buy the requisite molecules from a third party.

Saudi's Falih says sees no oil shortage, but OPEC to act if needed (Reuters) - Saudi Arabia’s Energy Minister Khalid al-Falih said on Saturday that he saw no oil supply shortage as global oil inventories are still rising, particularly from the United States, but OPEC will be responsive to the oil market’s needs. Speaking in Jeddah ahead of a ministerial panel gathering on Sunday of top OPEC and non-OPEC producers, including Saudi Arabia and Russia, Falih told Reuters OPEC will not decide on output until late June when the group is due to meet next. “I am not sure there is a supply shortage, but we will look at the (market) analysis. We will definitely be responsive and the market will be supplied,” Falih said, when asked whether an increase in output was on the table due to oil shortage concerns. “But all indications are that inventories are still rising. We saw the data from the U.S. week after week, and they are massive increases, so there is obviously supply abundance.” The Organization of the Petroleum Exporting Countries (OPEC), Russia and other non-OPEC producers, known as OPEC+, agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices. “We will be flexible. We are going to do the right thing as we always do,” Falih said of any decision at the meeting in June on continuing the reductions. Falih said OPEC was guided by two main principles: “One to keep the market in its direction towards balancing, and inventories (are) back to normal level. And two to be responsive to market needs. We will strike the right balance I am sure.” Saudi Arabia does not see a need to quickly boost production now with oil prices around the $70 a barrel level, as it fears a crash in prices and a build-up in inventories, OPEC sources said. But Russia wants to increase supply after June when the current OPEC+ pact is due to expire, the sources said. The United States on the other hand, which is not a member of the OPEC+ but is a close ally of Saudi Arabia, wants the group to boost output to bring oil prices down. Falih has to find a delicate balance between keeping the oil market well supplied and prices high enough for Riyadh’s budget needs, while pleasing Moscow to ensure Russia remains in the OPEC+ pact, and being responsive to the concerns of the United States and the rest of the OPEC+, the sources said.

Russia energy minister sees options for OPEC deal, including production rise  -- Russian Energy Minister Alexander Novak said there were different options available for OPEC and its oil-producing allies in the second half of 2019, including a possible raising of output. The OPEC+ alliance held a ministerial monitoring committee meeting, known as the JMMC, on Sunday in the Saudi Arabian city of Jeddah. The producers agreed to continue monitoring the oil market and are set to meet again in late June to review their oil supply cut agreement. “As far as our joint plan of action for the second half of the year. We are supportive of continuing our cooperation with our colleagues from other countries,” Novak told CNBC’s Dan Murphy in Jeddah, according to a translation. “But this continuation could depend to various extents on how the situation unfolds by this time and what the forecasts for supply and demand will be on the market. If it turns out that there will be a shortfall in the market then we will be prepared to examine options linked with a possible increase in production,” he said Sunday. His comments come five months into a fresh round of production cuts from OPEC+. The deal is designed to stop inventories building up and weakening prices. Russia has been vocal about raising production while OPEC’s de-facto leader, Saudi Arabia, has been wary of a possible price crash that an output increase could cause. The output cuts have helped oil prices to rise more than 30% so far this year.

Trade war and Iran tensions creating a 'very unstable' oil market, Russia minister says - Current geopolitical tensions are making it harder and harder for oil-producing nations to make decisions that will help stabilize crude prices, Russian Energy Minister Alexander Novak told CNBC Sunday. Asked about tensions in the Middle East, Novak said that problems in the region were becoming “greater and greater,” but added that the U.S.-China trade conflict was also having a destabilizing effect. “We have seen in the last few days an exchange of the imposition of customs duties. In addition, we have seen risks of a geopolitical nature with regards to this region,” Novak told CNBC’s Dan Murphy in Jeddah, Saudi Arabia, according to a translation. “This all tells us that the market is very unstable. And there are many factors that have become bigger and it’s more complicated to take longer-term decisions that are fundamental to the market,” he added. The comments come amid escalating tensions between Tehran and Washington and just days after drone attacks on Saudi oil infrastructure carried out by Iranian-aligned Houthi rebels from Yemen. Asked whether Russia could do more to promote security and stability in the region as a friend of Iran, Novak said: “We need to fine tune our relationships as fully as possible so that the issue of energy security is at the forefront.” He caveated that it was hard to comment on this week’s incidents in the Middle East without adequate detail, but said they demonstrate how “fragile the question of achieving and providing energy security is.”

OPEC has two main options for June meeting, both foresee output rise - sources (Reuters) - Saudi Arabia and Russia are discussing two main scenarios for a meeting of OPEC and its oil-producer allies in June and both frameworks propose increased crude output from the second half of 2019, two sources familiar with the matter said. Russia wants to ease the cuts of 1.2 million barrels per day (bpd) being carried out by the so-called OPEC+ alliance, the sources said. The United States has also urged the Organization of the Petroleum Exporting Countries to boost supply. The sources said OPEC’s first scenario was to eliminate over-compliance with agreed cuts, which would mean increasing output by around 0.8 million bpd. Over-compliance arose from lower exports and output from Iran and Venezuela because of U.S. sanctions, and Saudi output reductions that have been more than called for by the OPEC+ pact. OPEC and its allies are effectively curtailing production by close to 2 million bpd. Another option is to ease the agreed cuts from 1.2 million bpd to 0.9 million bpd, which would mean raising output by some 0.3 million bpd, one source said. OPEC meets on June 25-26 in Vienna. 

Saudi Arabia says oil producers want to reduce inventories (Reuters) - Saudi Energy Minister Khalid al-Falih said on Sunday there was consensus among OPEC and allied oil producers to drive down crude inventories “gently” but his country would remain responsive to the needs of what he called a fragile market. Falih said a possible rollover in the second half of 2019 of output curbs agreed by OPEC and non-members was the main option discussed at a ministerial panel meeting during the day but “things can change by June”. “This second half, our preference is to maintain production management to keep inventories on their way declining gradually, softly but certainly declining towards normal levels,” he told a news conference after the panel meeting. OPEC, Russia and other non-member producers, an alliance known as OPEC+, agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices. Russian Energy Minister Alexander Novak earlier said an easing of cuts had been discussed and the supply situation would be clearer in a month, including from countries under sanctions. Two sources said Saudi Arabia, OPEC’s de facto leader, and Russia were discussing two main scenarios for June’s OPEC+ meeting and that both frameworks proposed higher output from the second half. One scenario was to eliminate over-compliance with agreed cuts, which would increase output by some 0.8 million bpd, while the other option was to ease the agreed cuts to 0.9 million bpd. Falih told reporters the market was “very fragile” with conflicting data due to concerns about supply disruptions while inventories rise, but that a “comfortable supply situation” should be seen in weeks and months to come. He said high compliance with the agreed cuts was not sustainable and that over-conformity by some countries “can be reversed in June”. price

OPEC Signals Intention to Limit Supply All Year- Saudi Arabia and other key producers in OPEC signaled their intention to keep oil supplies constrained for the rest of the year, while pledging to prevent any genuine shortages. It was less clear how far Russia, their main partner in the wider OPEC+ producers’ coalition, shared that view. While most nations at a meeting in the kingdom on Sunday supported extending production cuts to the end of the year, Russian Energy Minister Alexander Novak talked about potentially relaxing the curbs and wanted to wait and see what happens in the next month. “We need to stay the course, and do that for the weeks and months to come,” Saudi Energy Minister Khalid Al-Falih told reporters after the meeting in Jeddah. The kingdom “isn’t fooled” by crude prices, currently above $70 a barrel in London, and believes the market is still fragile. The contrasting messages underscore the uncertainty in the global market. If ministers don’t agree to an extension next month, the production cuts that ended the worst oil-industry downturn in a generation will expire. Yet their decision is clouded by the impact of U.S. sanctions on Iran and the risk to demand from President Donald Trump’s trade war with China. In a market where the preponderance of risks are on the supply side -- with Venezuela and Libya also facing disruptions -- what Saudi Arabia chooses to do with its ample spare production capacity may be the market’s deciding factor in the coming months. The kingdom has so far been trying to strike a balance between its own need for higher revenues to fund government spending, and pleasing Trump by filling any supply gap created by his moves against Iran. On Sunday, Al-Falih gave a strong indication that prices were the priority and he wasn’t about to open the taps.  “My recommendation to my colleagues will be to drive inventories down gently” by extending the current cuts into the second half, Al-Falih said. He acknowledged consumers’ concerns about potential supply disruptions and promised to make sure “no refinery, no customer is left without their requirement of crude oil.”  Regardless of what OPEC+ decides next month, output in July won’t exceed the kingdom’s limit in the deal of 10.3 million barrels a day, he said. It’s unclear how much Iran is exporting, and so far demand for replacement crude from Tehran’s customers has been lower than expected, Al-Falih said.

OPEC is poised to defy Trump once again by keeping a lid on oil output -Major oil-producing nations are leaning toward keeping a lid on production throughout 2019, defying President Donald Trump’s calls to open the taps and cut the cost of crude. OPEC and a group of allies led by Russia are trying to keep supply and demand in balance and stabilize prices by pumping less oil. Over the weekend, a committee representing the so-called OPEC+ alliance strongly signaled the group will extend the policy, which has helped to boost oil prices by about $20 a barrel this year. If OPEC+ follows that course when producers meet in June, it would be the second time in six months the group ignored Trump, who lobbied against the current production cuts last fall. So long as the production caps remain in place, oil prices are likely to remain anchored near six-month highs around $63 a barrel. That would keep a thorn in Trump’s side. The economy-focused president wants to lower prices at the pump, but his foreign policy is putting upward pressure on oil futures, which in turn increases gasoline costs. Washington has restricted global oil supplies by slapping sanctions on OPEC members Iran and Venezuela. Trump wants his allies in Saudi Arabia and the United Arab Emirates, two of OPEC’s biggest producers, to offset those losses by pumping more oil. But the Saudis and Emiratis have not committed to hiking output. On Sunday, Saudi Arabia’s influential oil minister, Khalid al-Falih, warned that global crude stockpiles are rising, threatening to swamp the world in oil and cause prices to collapse. “Overall, the market is in a delicate situation,” Falih told reporters at the committee meeting in Jeddah, Saudi Arabia. “On the one hand, there is a lot of concern — and we acknowledge it — about disruptions and sanctions and supply interruptions,” he said. “But on the other hand, we see inventories rising. We see plentiful supply around the world ... which means we think, all in all, we should be in a comfortable situation in the weeks and months to come.”

Political risks may be supporting oil prices, but that's likely just short term, JP Morgan says -- Oil prices jumped on Monday after Saudi Arabia indicated a possible rollover of output curbs amid political supply risks, but that support is likely to be short-lived due to fundamental changes in the energy industry, an expert said on Monday. “It’s alright to talk about supply-side risks, but that’s sort of near-term ... I don’t think expectations for oil prices have actually gone up,” said Scott Darling, J.P. Morgan’s head of Asia Pacific oil and gas research. That’s because of the rise of U.S. shale energy and slowing demand due to global economic uncertainties, Darling told CNBC’s “Squawk Box.” J.P. Morgan expects OPEC to extend its oil output cuts to 2020. Oil prices jumped on Monday after Saudi Energy Minister Khalid al-Falih indicated there was a consensus among OPEC and allied oil producers to continue limiting supply. Falih said the main option discussed at a ministerial panel meeting during the day was for a rollover of the output curbs agreed by OPEC and non-members in the second half of 2019. Still, he said, “things can change by June.” OPEC, Russia and other non-member producers, an alliance known as OPEC+, agreed to reduce output by 1.2 million barrels per day from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices. Brent crude futures were at $73.23 a barrel at 12:06 p.m. HK/SIN, up $1.02, or 1.4%, from their last close. Brent closed down 0.6% on Friday. J.P. Morgan’s forecast for Brent crude is $75 per barrel by the end of the second quarter of 2019. For the full year, however, Brent crude will average $71 a barrel for 2019 and will weaken to $60 a barrel from 2021, said Darling. Darling’s comments come as the market expects Iranian oil exports to drop further in May and Venezuelan shipments could fall again in coming weeks due to U.S. sanctions.

Funds sell oil as economic fears trump supply threats- Kemp (Reuters) - Hedge funds continued to liquidate some of their bullish position in oil last week as concerns about the economy and the outlook for consumption outweighed escalating tensions and the threat to supplies in the Middle East. Hedge funds and other money managers cut their combined net long position in the six major petroleum futures and options contracts by 19 million barrels in the week to May 14. Fund managers have now cut their net long position for three weeks running, by a total of 61 million barrels, after raising it 609 million barrels over the previous 15 weeks since Jan. 8 (https://tmsnrt.rs/2WShIb7). Selling was concentrated in crude (-22 million barrels) and for the first time spread to Brent (-9 million) as well as NYMEX and ICE WTI (-13 million), according to position records published by regulators and exchanges. By contrast, funds made only small changes in fuels: net purchases of U.S. gasoline (+1 million barrels), sales of U.S. heating oil (-2 million barrels) and purchases of European gasoil (+4 million barrels). Portfolio managers are likely to be liquidating some of their bullish crude positions after the market appeared to become overextended and amid concern about the deteriorating economic outlook. The concentration of long positions had become a major source of downside price risk, if and when managers attempted to realise some of their profits after the rally since the start of the year. Fund managers have now reduced their ratio of long to short positions in crude to 7:1, down from a recent peak of more than 10:1 on April 23 (and to 4:1 from 8:1 in the case of WTI). In fuels, however, the relatively low level of inventories has encouraged funds to remain very bullish, at least in the case of U.S. gasoline and European gasoil. 

Oil edges higher as OPEC signals it will cap output, Iran tension rises Oil edged higher on Monday after hitting multi-week highs overnight, as OPEC indicated over the weekend that it was likely to maintain production cuts that have helped boost crude prices this year. Escalating Middle East tensions provided further support. Brent crude oil was up 15 cents at $72.36 a barrel around 12:10 p.m. ET (1610 GMT). The international benchmark for oil prices earlier touched $73.40, the highest since April 26. U.S. West Texas Intermediate crude futures were up 24 cents at $63 a barrel. WTI reached $63.81 earlier, the highest since May 1. Saudi Energy Minister Khalid al-Falih said on Sunday there was consensus among OPEC and allied oil producers to drive down crude inventories “gently” but he would remain responsive to the needs of a “fragile market.” United Arab Emirates Energy Minister Suhail al-Mazrouei earlier told reporters that producers were capable of filling any market gap and that relaxing supply cuts was not the right decision. OPEC data indicates oil inventories in the developed world rose by 3.3 million barrels month-on-month in March, and were 22.8 million barrels above their five year average. A gathering of the Joint Ministerial Monitoring Committee in Saudi Arabia over the weekend did not make any solid recommendations in a closely watched statement, leaving a decision on policy for a meeting of OPEC and its allies next month in Vienna. “While not explicitly mentioned in the statement, uncertainty on how many Iranian and Venezuelan oil barrels will be lost due to U.S. sanctions was probably the main reason the group kicked the can down the road,” UBS analyst Giovanni Staunovo said. OPEC, Russia and other non-OPEC producers, an alliance known as OPEC+, agreed to cut output by 1.2 million barrels per day from Jan. 1 for six months to try to prevent inventories from increasing and weakening prices.

Oil Prices Rise As Trump Warns Of The 'end Of Iran' – RTTNews  Oil prices rose on Monday after U.S. President Donald Trump threatened to destroy Iran in a tweet on Sunday.  Benchmark Brent crude rose about 0.4 percent to $72.53 while WTI crude futures were up 0.3 percent at $63.12 per barrel. "If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!," Trump tweeted Sunday afternoon after reports emerged that a rocket was fired into Baghdad's heavily fortified Green Zone less than a mile away from the U.S. Embassy. Meanwhile, a Saudi Arabian diplomat said his country doesn't want to go to war with Iran but would defend itself after two Saudi oil tankers were targeted by acts of sabotage off the coast of the United Arab Emirates last week. Crude oil futures pared early gains and settled modestly lower on Friday, but still closed the week with solid gains, amid prospects of supply disruptions due to escalation in tensions in the Middle East.

Oil up on escalating US-Iran tensions, but trade war worries cap gains - Oil prices rose on Tuesday on escalating U.S.-Iran tensions and amid expectations that producer club OPEC will continue to withhold supply this year. But gains were checked by concerns that a prolonged trade war between Washington and Beijing could lead to a global economic slowdown. Brent crude futures, the international benchmark for oil prices, were at $72.18 per barrel at 0651 GMT, up 21 cents, or 0.3 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were up 31 cents, or 0.5 percent, at $63.41 per barrel. “Escalating tensions between the U.S. and Iran, in addition to signs that OPEC will continue its production cut, drove oil higher,” said Jasper Lawler, head of research at futures brokerage London Capital Group. U.S. President Donald Trump on Monday threatened Iran with “great force” if it attacked U.S. interests in the Middle East. This came after a rocket attack in Iraq’s capital Baghdad, which Washington suspects to have been organised by militia with ties to Iran. Iran said on Tuesday that it would resist U.S. pressure, declining further talks under current circumstances. The tension comes amid an already tight market as the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been withholding supply since the start of the year to prop up prices. A meeting has been scheduled for June 25-26 to discuss the policy, but the group is now considering moving the event to July 3-4, according to OPEC sources on Monday, with its de-facto leader Saudi Arabia signalling a willingness to continue withholding output. Price gains were constrained by pressure on financial markets, which have this week been weighed down by worries that the United States and China are digging in for a long, costly trade war that could result in a broad global slowdown.

Oil Markets In Limbo After OPEC+ Meeting - Oil was flat at the start of trading on Tuesday, still caught between U.S.-Iran tensions on the one hand, and the downside risk of the U.S.-China trade war. OPEC+ reportedly discussed two options for increasing production in the second half of the year. According to Reuters, the group weighed a plan that would end over-compliance with the cuts, which could add 0.8 mb/d of supply back onto the market. Or, the group could agree to trim the cuts from 1.2 to 0.9 mb/d. However, the group will wait until the June meeting in Vienna to make a decision, and many members are inclined to extend the cuts. ExxonMobil evacuated staff from southern Iraq, following the U.S. decision to withdraw embassy personnel from Baghdad. The West Qurna 1 project has not seen production affected. Iraqi officials said the withdrawal of oil workers was unwarranted.  President Trump said that any trade deal with China must skew in favor of the U.S. because of past trade actions by China. The message seems to lower odds of a breakthrough in the weeks ahead. Meanwhile, the Trump administration lifted steel tariffs on Mexico and Canada. U.S. capital spending rose 3 percent in the first quarter year-on-year, down from a 20 percent jump in spending in the first quarter of 2018. The data raised the prospect that the U.S. economy could slow in the second half of this year.. Bankruptcies in the U.S. energy sector are “trailing only those in the discretionary consumer goods sector,” Bloomberg News reported. Oilfield services giant Weatherford International PLC, recently delisted from the New York Stock Exchange, may need to file for Chapter 11 bankruptcy. The company lost $2.8 billion last year. Other signs of stress are emerging in the shale patch with Halcon Resources also a financial wreck. The SEC is investigating Alta Mesa for potential fraud in financial reporting. “A lot of people see the $60 or $70 and assume everything is great,” said Spencer Cutter, an analyst at Bloomberg Intelligence. “I think 2019 is going to be a bigger year for bankruptcies than 2018.”

WTI Slides Below $63 After Surprise Crude & Gasoline Builds -WTI traded lower today (finding support around $63) as anxiety over the ongoing US-China trade deal weighed on global growth (demand) sentiment (after yesterday's gains on OPEC/Saudi supply comments). “Given the fact that the macro environment isn’t looking spectacular, oil is doing relatively well," said Bart Melek, head of commodity strategy at Toronto’s TD Securities. “It’s very much marching to its own drumbeat here, with the supply side being supportive in the face of less risk appetite."Product draws have been shrinking and crude builds increasing recently, dragging investors' eyes back to the 'gluttiness' of energy markets... API:

  • Crude +2.4mm (-1.3mm exp)
  • Cushing +871k
  • Gasoline +350k (-662k exp)
  • Distillates -237k (-158k exp)

API reported a surprise inventory build in crude and gasoline... WTI traded back down to Sunday night futures opening levels today, hovering around $63 ahead of the API print and kneejerking lower after the data hit...

Oil sinks 2.7% as US crude stockpiles surge, demand worries flare - Oil futures sank on Wednesday as an unexpected build in U.S. crude stockpiles compounded investor worries that a prolonged trade war between Washington and Beijing could dent crude demand. U.S. West Texas Intermediate crude futures settled $1.71 lower at $61.39, tumbling 2.7 percent to the lowest closing level in more than a week. Brent crude futures fell $1.19, or 1.7%, at $70.99 at barrel. U.S. crude inventories swelled by 4.7 million barrels in the latest week to their highest since July 2017, the U.S. Energy Information Administration reported. Analysts polled by Reuters had forecast a decrease of 599,000 barrels as refineries cut output. “It’s at the extreme end of the range of possibilities for a bearish report,” said Bob Yawger, director of futures at Mizuho in New York. “It’s about as bad as it could have been considering the fact that driving season is so close.” Gasoline stocks posted a surprise build as well, rising by 3.7 million barrels compared with analysts’ expectations for an 816,000-barrel drop. The prospect of a long-term tariff fight between China and the United States also pressured prices. No further talks between top officials have been scheduled since the last round ended in a stalemate on May 10. The conflict is weighing on economic growth forecasts and oil demand predictions. The Organization for Economic Co-Operation and Development (OECD) on Tuesday revised down its global growth forecast for the year.

EIA Weekly Petroleum Report -- May 22, 2019 --WTI: down 1.5%; down almost a buck; now trading at $62.22/bbl. Gee, I wonder why?

The EIA numbers for week ending May 17, 2019:
  • US crude oil inventory: increased by 4.7 million bbls
  • US crude oil inventory: stands at 476.8 million bbls, about 4% above the 5-year average (last week, total inventories were said to be about 2% above the 5-year average)
  • refinery operating capacity: operating at 89.9% -- very low -- and it's down slightly from last week
  • both gasoline and distillate fuel production decreased last week
  • US crude oil imports have dropped considerably, now down close to 10% compared to same four-year period last year
  • gasoline imports average 1.4 million bpd; it would be interesting to see how much of this was "California"
  • gasoline inventories increased by 3.7 million bbls (significantly exceeded forecast; see above)
  • distillate fuel inventories increased by about 1 million bbls (in line)
  • but look at this: propane/propylene inventories are about 22% above the 5-year average; increased by 3 million bbls last week
  • jet fuel supplied was up again; up 2.5% compared to same four-week period last year

Secretary of State Pompeo says he's confident the oil market is well supplied despite Iran tensions - Secretary of State Mike Pompeo told CNBC on Thursday that the Trump administration has taken measures to prevent oil prices from spiking while it attempts to drive Iran’s crude exports to zero. The administration has tried to assure Americans that U.S. allies in Saudi Arabia, the United Arab Emirates and elsewhere will fill the gap left by falling Iranian supply. “We are confident that we’ve done the hard work to make sure that the market is well supplied, and I hope that we can continue to maintain that, and I think that we can,” he told CNBC’s “Squawk Box” on Thursday. Supplies from Iran, one of the world’s top oil producers, are expected to fall by hundreds of thousands of barrels per day in the coming weeks after Washington tightened sanctions on the Islamic Republic this month. While Saudi Arabia has signaled that it will pump more oil, it has also indicated that OPEC and its oil market allies are not ready to lift price-boosting output caps. Led by Saudi Arabia, the producers have been trying to keep 1.2 million barrels per day off the market since January. They appear poised to continue limiting supply in the second half of 2019. The U.S. expedited the deployment of military assets to the Persian Gulf and withdrew diplomatic staff from Iraq, claiming threats by Iran against U.S. positions in the region. Meanwhile, Iran has ramped up production of nuclear materials, four vessels were sabotaged off the coast of UAE and Iran-aligned Houthi rebels in Yemen attacked oil infrastructure in Saudi Arabia. Pompeo said the administration is not overhyping the threat from Iran, following reports that some members of the administration believe recent U.S. maneuvering in the region represents an overreaction to intelligence. “We briefed Congress extensively on Tuesday,” Pompeo said. “I think almost every member, Democrats and Republicans alike, walked out of that room understanding that the threats that we were discussing and the decision that President Trump made to take a posture to deter those threats and protect our forces were wholly justified and reasonable.” Despite the tension, Pompeo argued that the U.S. policy against Iran is not impacting oil prices much. He noted that Brent crude oil prices now at $69 a barrel are lower than a year ago, when the U.S. pulled out of the Iran nuclear deal and began restoring sanctions on the Iranian economy.

Oil plunges 5.7% to $57.91 as US-China trade war raises fuel demand worries - Oil prices tumbled nearly 6% on Thursday, extending steep losses in the previous sessions, as the market braced for a prolonged U.S.-China trade war and digested disappointing manufacturing data. Some analysts also pointed to signs that Middle East tensions are moderating. Brent crude futures sank $3.35, or 4.7%, to $67.64 per barrel around 2:20 p.m. ET (1820 GMT). The international benchmark for oil prices hit a nearly two-month low earlier in the session and is on pace for its worst week since December. U.S. West Texas Intermediate crude futures settled $3.51 lower at $57.91 per barrel, tumbling 5.7% to the lowest closing price since March 12. WTI is on track to end the week 7.7% lower and post the worst weekly performance in five months. “The $60 level is a critical support point,” said John Kilduff, founding partner at energy hedge fund Again Capital. “After $60, really it’s right down around $58 or so. Theoretically, if this thing really becomes a washout, $52 is the downside objective,” he said, cautioning that the move would not happen overnight. Crude futures fell with the stock market as the ongoing U.S.-China trade dispute entered a new phase. A wave of companies is suspending business with Huawei after the U.S. blacklisted the Chinese telecom giant. Washington and Beijing are set to increase tariffs on hundreds of billions of dollars of one another’s goods, raising concerns about a global economic slowdown and weaker demand for oil. U.S. manufacturing activity grew at its slowest pace since September 2009 this month, according to IHS Markit. Meanwhile, data released overnight showed Japanese manufacturing activity fell into contraction in May. Manufacturing activity for the European Union and Germany also came in below expectations.

Oil's Worst Day Of 2019- The Silence Before The Storm In Energy Markets - WTI just hit a $57 handle for the first time in over two months, with the biggest drop of the year, as extreme positioning is accelerating anxiety over both the demand and supply side of the energy markets. But, with oil production plunging in Venezuela and Iran, tension in the Middle East at its highest point in years, and the threat of further outages in Libya, why are oil prices not trading higher? OilPrice.com's Nick Cunningham explains:Even price volatility has been rather low, a surprising feature of a tight market rife with geopolitical risk.  Brent crude has been stuck between a relatively narrow range of $70 to $75 per barrel for more than a month, despite all the turmoil.Furthermore, even the back end of the futures curve has barely budged, trading between $60 and $65 per barrel. At the same time, the front end of the curve has moved into steep backwardation – when near-term contracts trade at a premium to longer-dated futures. Backwardation is typically associated with a tight oil market – essentially, traders are willing to pay a premium for oil today relative to deliveries six or twelve months out.What does all of this mean? “The recent movements in the oil price complex indicate some deep dislocations between the physical and futures markets and in market expectations about current and future oil market fundamentals,” the Oxford Institute for Energy Studies (OIES) wrote in a new reportThe big question is how and when Saudi Arabia will respond. Riyadh is very reluctant to see a repeat of 2018 when prices crashed following production increases. This time around Saudi Arabia will err on the side of letting the overly tighten, although the OPEC+ group has adopted a “wait-and-see” approach, putting off a decision until the June meeting (which may even get pushed into July). That way, OPEC+ officials will have more data on how U.S. sanctions are affecting production in Iran and Venezuela, and events surrounding the U.S.-China trade war will also become clearer.

US oil rises 1.2% to $58.63 per barrel, but posts worst week of 2019 -- Oil prices rose Friday ahead of long U.S. and UK holiday weekends, but posted their biggest weekly drop of the year, pressured by rising inventories and concern over an economic slowdown. Brent crude rose 93 cents, or 1.4% to $67.69 a barrel but the global benchmark still posted a weekly loss of more than 4.5%. U.S. West Texas Intermediate crude rose 1.2% to $58.63, yet it recorded a one-week loss of more than 6%, its biggest of 2019. U.S. crude inventories have risen to their highest since July 2017, suggesting ample supplies in the world’s top consumer, with prices also hit by worries that the U.S.-China trade conflict is developing into a more entrenched dispute. U.S. inventories also rose due to more sluggish refinery rates than normal for this time of year. In particular, refining usage in the Midwest region plunged to its lowest levels in May since 2013. Stockpiles at the Cushing, Oklahoma, delivery hub for U.S. crude futures were at the highest since December 2017, government data showed this week.  8 “U.S. businesses affected by the increased tariffs will be making decisions regarding purchases, inventories, etc., that are apt to force some downshifts in the U.S. economic growth path that could have implications for U.S. oil demand,”  “A decline below our expected next support level of $56 (for WTI) will likely associate with a further plunge in equities that would be heavily related to unresolved trade issues between the U.S. and China ... volatility across all markets will be heightened until some significant trade progress is seen.”  Concerns over the health of the world economy linked to trade tensions have hit global markets this week, with the MSCI All Country index in line for a more than 1% fall in its third week in the red.

Saudi-UAE coalition carries out deadly air raids on Yemen's Sanaa - At least six civilians, including women and children, were killed and dozens wounded in Saudi-UAE-led coalition air raids on residential areas and Houthi rebel military targets in Yemen's capital, Sanaa.  The coalition carried out 11 attacks on the capital in all, out of a total of 19 across rebel-held territory on Thursday, the Houthi-run Masirah TV channel reported. It blamed "aircraft of the [Saudi-led] aggression".  The air strikes came after the Iran-aligned rebels claimed drone attacks that temporarily shut a key oil pipeline in neighbouring Saudi Arabia.Rubble filled a populated street lined by mud-brick houses, a Reuters journalist on the scene said. A crowd of men lifted the body of a women, wrapped in a white shroud, into an ambulance. Saudi-owned broadcaster Al Arabiya quoted a coalition statement as saying it launched an operation aimed at "neutralising the ability of the Houthi militia to carry out acts of aggression"."The sorties achieved its goals with full precision," it said, adding civilians had been warned to avoid those targets. Masirah quoted the Houthi health ministry as saying six civilians, including four children, had been killed and 52 wounded, including two Russian women working in the health sector.

Saudis Claim Intercept Of Iran-backed Houthi Missiles Headed For Mecca - Saudi Arabia has claimed that its air defenses shot down two ballistic missiles over the city of Taif, just 65 kilometers east of Mecca, in the early hours of Monday morning. Saudi officials claim that another missile was intercepted over the Haddah in western Saudi Arabia. The Saudi newspaper Okaz reported the missiles were intercepted as residents were breaking their day-long Ramadan fast. The paper claimed that the attempted attack was evidence that Yemen's Houthis had no regard for the safety and security of Muslim pilgrims visiting Mecca during the nights of Ramadan. The Houthis have unequivocally denied any involvement in the attacks. Mohammed AbdulSalam, a spokesman for the Houthi political wing Ansar Allah, said in a statement, “We avoid targeting civilians as well as holy places, and this [accusation] is Saudi bankruptcy,” adding “Saudi Arabia fabricated the Houthi threat [to Meccia] in order to mobilize official and popular support.”The Yemeni army, which is allied with the Houthis, said in a statement in the wake of Saudi accusation: “This isn’t the first time the Saudi regime has accused us of targeting Mecca. The objective of these accusations is to gain support and approval for their monstrous aggression.” An army spokesperson noted that the Houthis have never denied previous military maneuvers, saying “We do not hesitate to announce our military operations.”The Houthis did claim responsibility for last week’s attack on two Saudi oil pumping stations in the provinces of Dawadmi and Afif near the Saudi capital, Riyadh. High-ranking officials in the Yemeni army, as well as the Houthi Political Council, told MintPress that the pumping station attack was not part of a regional effort to stir up tension between Iran and the United States, and was planned before those tensions came about.

Houthi drone attack 'hits arms depot' at Saudi airport in Najran - Yemen's Houthi rebels said they launched a bomb-laden drone into Saudi Arabia targeting an airport with a military base - an attack acknowledged by the kingdom. It was not clear if there were any injuries or what the extent of damage was. The Houthis' Almasirah satellite news channel said early on Tuesday the attack hit the airport in Najran with a Qasef-2K drone, striking an "arms depot". Najran, 840km southwest of Riyadh, lies on the Saudi-Yemen border and has repeatedly been targeted by the Houthis. A statement earlier on the state-run Saudi Press Agency quoted Saudi-led coalition spokesman Colonel Turki al-Maliki as saying the Houthis "had tried to target" a civilian site in Najran, without elaborating. Al-Maliki warned there would be a "strong deterrent" to such attacks and described the Houthis as the "terrorist militias of Iran". Houthi drone attacks in Saudi 'show new level of sophistication'Similar Houthi attacks in the past have prompted rounds of Saudi-led air raids on Yemen, which have been widely criticised internationally for killing civilians. Civilian airports throughout the Middle East often host military bases. 

Saudi Arabia, Gulf states agree to deploy US forces to deter Iran: report - Saudi Arabia and a number of Gulf states have agreed to let the United States deploy its forces at sea and on land to deter Iran from a possible attack, Saudi daily Al-Sharq Al-Awsat reported on Saturday. An unnamed Saudi official told Al-Awsat that the "agreement was aimed at deterring Iran from a military escalation, including attacking American targets... and not with the aim of entering into a war with it." While both Washington and Tehran have said recently that neither is interested in a war, the head of Iran’s Revolutionary Guards (IRGC) said on Saturday that his country is in a intelligence war with the US and “enemies of the Islamic Republic”. “We are in a full intelligence war with the United States and the enemies of the Islamic Republic. This war is a combination of psychological warfare, cyber operations, military operations, diplomacy, fear, and intimidation,” Major General Hossein Salami said. Unlike Iran's Supreme Leader Ayatollah Khamenei and Foreign Minister Mohammed Javad Zarif, the IRGC has warned that the Islamic Republic is on the verge of a "full-scale confrontation with the enemy." "This moment in history, because the enemy has stepped into the field of confrontation with us with all the possible capacity, is the most decisive moment of the Islamic revolution," Salami said on Thursday according to Fars News Agency.

FM Javad Zarif: We don’t want war, and no one can confront Iran -Iranian Foreign Minister Mohammad Javad Zarif says he does not believe a war will break out in the region as Tehran does not want a conflict and no country has the "illusion it could confront Iran", state news agency IRNA reports. Concerns about a possible conflict have flared since the White House ordered warships and bombers to the Middle East to counter an alleged, unexplained threat from Iran. Earlier this week the US also pulled some diplomatic staff from its embassy in Baghdad following weekend attacks on four oil tankers off the coast of the United Arab Emirates (UAE)."There will be no war because neither we want a war, nor has anyone the idea or illusion that it can confront Iran in the region," Zarif told IRNA before ending his visit to Beijing. Meanwhile, Saudi media reported that the kingdom and a number of Gulf states have agreed to a request by the US to redeploy its military forces in Gulf waters and territories.  The motive for redeployment, according to the Saudi reports, was to deter Iran from any attempt to escalate the situation militarily, not to engage in a war with it.  This all takes root in US President Donald Trump's decision last year to withdraw the US from the 2015 nuclear accord between Iran and world powers and impose wide-reaching sanctions.  The move came even as the International Atomic Energy Agency (IAEA) has verified that Tehran has upheld its obligations under the deal. Last week, Time magazine quoted Pentagon officials as saying there was no military plan to confront Iran.On the Iranian side, the Guardian newspaper reported in an exclusive report on Thursday that Tehran had ordered its militias in the Middle East to prepare for a proxy war.The deputy commander of Iran's Revolutionary Guards, Mohammad Saleh Jokar, said on Friday that his country's missiles could easily reach US warships anchored in the Gulf and the rest of the region in case of war. On the other hand, a senior Iranian legislator, Hashmatullah Falahat Pishe, called for an Iranian-American dialogue in Iraq or Qatar, to de-escalate tensions with Washington.

Top Iran Commander Invokes 9/11 To Say US Is "Frail"; A "Full Intelligence War" Is On - lran is currently in "a full intelligence war" with the United States, according to statements by the head of Iran’s Revolutionary Guards, Major General Hossein Salami on Saturday. “We are in a full intelligence war with the United States and the enemies of the Islamic Republic. This war is a combination of psychological warfare, cyber operations, military operations, diplomacy, fear, and intimidation,” Salami, who became head of Iran's elite military force last moth, was quoted as saying by Fars news agency. He further noted Americans in the region face "great risks" at this point. “America has lost its power, and even though they look powerful, they are frail,” he said. But what's most likely to capture the West's attention is his invoking the 9/11 terror attacks: “In reality America’s story is the same as the story of the World Trade Center that collapsed suddenly with one strike,” he said, using the example both as a threat and to claim the mighty US empire can be brought to its knees with one strategic blow.   His combative statements came days after he said provocatively that the IRGC stood on the “cusp of a full-scale confrontation with the enemy.” In that prior address , Salami notified his forces, "This moment in history, because the enemy has stepped into the field of confrontation with us with all the possible capacity, is the most decisive moment of the Islamic revolution," according to Fars. Washington has already deployed the USS Abraham Lincoln carrier strike group and new Patriot missiles, along with a B-52 bomber group to the Persian Gulf region, but Saudi Arabia and other gulf states this weekend have reportedly agreed to host American forces "at sea and on land to deter Iran" according to a new report in Israeli media, citing Arabic sources: Saudi Arabia and a number of Gulf states have agreed to let the United States deploy its forces at sea and on land to deter Iran from a possible attack, Saudi daily Al-Sharq Al-Awsat reported on Saturday.

Persian Gulf tensions rise as Trump threatens “end” of Iran - A tweet by President Donald Trump threatening to put an “end” to Iran sharply escalated the war crisis in the Persian Gulf, even as US warships launched a series of provocative military exercises in close proximity to Iranian shores. “If Iran wants to fight, that will be the official end of Iran,” Trump tweeted. “Never threaten the United States again!” It is by no means clear what “threat” Trump had in mind. The tweet came just hours after a Katyusha rocket fell in Baghdad's Green Zone near the statue of the Unknown Soldier, approximately a third of a mile north of the US Embassy, causing no injuries. While National Security Adviser John Bolton, who has long called for the bombing of Iran and regime change, went to the White House to brief the president on the incident, there were indications that Trump was responding not to this event but rather to commentary on Fox News, having tweeted just before in apparent response to a segment on immigration and then tweeting his threat to put and “end” to Iran following a Fox News segment on Iran. The errant rocket fired into the Green Zone, one of the most heavily fortified enclaves on the planet, was immediately attributed by the US media to Iran or its “proxies,” even though no one has claimed responsibility for the incident and there are a multitude of factions and people in the country who have every reason to want to lob a missile at the US embassy, or for that matter, at the seat of Iraq’s corrupt bourgeois government. Earlier “threats” from Iran have emanated from the leadership of the country’s Islamic Revolutionary Guards Corps, which has warned Washington that it is not intimidated by the massive military deployment in the Persian Gulf, and that US warships constitute as much of a target as they do a threat. Washington earlier this month fast-tracked the deployment of a carrier battle group, led by the USS Abraham Lincoln, to the region, and sent in a bomber task force, including nuclear-capable B-52s, to conduct over-flights off the Iranian coast. This has been followed by the dispatch to the region of amphibious assault warships carrying US Marines, warplanes and landing craft, as well a Patriot missile battery. The Pentagon, meanwhile, has drawn up war plans calling for the shipping of as many as 120,000 US troops to the region—a similar number to the force deployed to the region prior to the invasion of Iraq—in apparent preparation for an all-out war with Iran.

Trump’s ‘genocidal taunts’ will not end Iran – Zarif  -- Iran's Foreign Minister Mohammad Javad Zarif has dismissed US President Donald Trump's "genocidal taunts" and warned him not to threaten the country. Amid rising tensions, Mr Trump tweeted on Sunday: "If Iran wants to fight, that will be the official end of Iran." Mr Zarif said the US president should look to history. "Iranians have stood tall for millennia while aggressors all gone... Try respect - it works!" The US has deployed additional warships and planes to the Gulf in recent days. But Mr Trump's tweet marked a shift in tone after recent attempts by him to downplay the possibility of a military conflict with Iran. When asked by reporters on Thursday if the US was going to war, he said: "I hope not." Iranian state media reported on Monday that the country had increased by fourfold its production of low-enriched uranium, which was limited to a 300kg stockpile by the 2015 nuclear deal between Iran and world powers. "If they want us to maintain this limit, it would be better for European countries to take the measures they want to implement as soon as possible." Mr Trump unilaterally withdrew the US from the nuclear deal last year, but the European parties say they remain committed to it.

Iran’s Zarif: US playing ‘dangerous game’ in Gulf showdown - Iranian Foreign Minister Javad Zarif warned the United States is "playing a dangerous game" by boosting its military might in the Gulf as the fiery rhetoric between Washington and Tehran continues.Zarif criticised the US move to deploy an aircraft carrier strike group and bomber task force earlier this month in response to an unspecified threat, cautioning that "having all these military assets in a small area is in of itself prone to accidents"."Extreme prudence is required and the United States is playing a very, very dangerous game," he told CNN in an interview broadcast on Tuesday.Friction between Tehran and Washington has steadily ratcheted up this month, a year after US President Donald Trump pulled out of a landmark 2015 nuclear accord brokered between the Islamic Republic and several other world powers. Under the deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), Iran agreed to curb its nuclear programme in exchange for sanctions relief. Since then, the Trump administration has pursued a "maximum pressure" campaign against Tehran, which it accuses of being a destabilising actor in the Middle East. On Tuesday, Zarif said Tehran had "acted in good faith" over the JCPOA and accused the US of waging "economic warfare" on Iran by reimposing sanctions and moving to reduce Iranian oil exports to zero."Iran never negotiates with coercion. You cannot threaten any Iranian and expect them to engage. The way to do it is through respect, not through threats," Zarif said, adding there would b e "painful consequences" if current tensions escalate further.

Iran ramps up uranium production, throwing 'a brick on the accelerator' to nuclear threshold - Iran is ramping up its uranium output, a provocative step that threatens to further inflame simmering tensions with the United States and deepen regional conflict following a series of dangerous escalations in the Middle East.Iranian production of low-enriched uranium has recently increased fourfold, putting the nation on a path to exceed limits on nuclear materials set out in a 2015 agreement with world powers, a spokesperson for Iran’s atomic energy agency told Iranian news outlets on Monday.The supplies in question are not enriched to a level suitable for weapons development. Still, the increased output threatens to further erode the Iran nuclear deal and destabilize a region that provides much of the world’s energy supply.The comparison here is they were already going 55 miles per hour and heading towards a busted bridge. And so what the [Atomic Energy Organization of Iran] is saying is that they threw a brick on the accelerator. The stockpiling also raises concerns about the proliferation of nuclear materials,   President Donald Trump announced he would pull the U.S. out of the nuclear accord and restore wide-ranging economic sanctions against Iran just over a year ago. The other parties to the deal — China, Russia and the European Union — condemned the U.S. withdrawal and have attempted to preserve the agreement, which put limits on Iran’s nuclear activity in exchange for sanctions relief. Iran continued to abide by the terms of the deal until Washington sharply escalated tensions last month. In April, the Trump administration designated the Iranian Revolutionary Guard Corps a terrorist organization and announced it would tighten sanctions in a bid to drive Iran’s oil exports to zero. Shortly after the new U.S. sanctions policy took effect this month, Iran said it would stop complying with key parts of the nuclear deal.

Iran Says Uranium Enrichment Quadrupled, On Pace For Weapons-Grade Levels - It appears Iran is following through on its prior warnings issued to European leaders that it's ready to surpass enriched uranium production limits previously agreed to under the 2015 nuclear deal (JCPOA). News that Iran has "quadrupled its production of low-enriched uranium" comes as rhetoric between Tehran and Washington has reached new belligerent heights, with President Trump tweeting Sunday that US attack would be the "end" of Iran.  Crucially, on Monday both the semi-official Fars and Tasnim news agencies cited Iran's nuclear agency spokesman Behrouz Kamalvandi to say the country would reach the 300-kilogram limit set by the nuclear deal merely “in weeks” in what appears counter-threat signalling to Washington. Iran has also for months complained the EU is failing to hold up to its end of the bargain under the JCPOA to provide sanctions relief.   The AP notes of the Iranian media statements that "While the reports said the production is of uranium enriched only to the 3.67% limit set by the 2015 nuclear deal that Tehran reached with world powers, it means that Iran soon will go beyond the stockpile limitations established by the accord" if it continues on this pace.  Kamalvandi's statement made clear this didn't mean Iran increased the number centrifuges in use a key requirement of the deal however, The Wall Street Journal cited European diplomats two weeks ago who said they were informed by the Iranians of thier intent to ramp up research efforts into centrifuges that could produce highly enriched uranium faster. Amid renewed US pressures and military build-up in the Persian Gulf of late, Tehran has little confidence that the EU is capable of facing US sanctions, and despite some meager past efforts, such as the attempt to establish a 'SWIFT alternative,' EU initiatives to salvage the deal have been too little too late. Assuming war is not triggered by then, the Iranians have issued Europe an ultimatum to come up with new terms by July 7th or else weapons-grade levels of uranium will be enriched, per the AP:

Iran won't be alone if war breaks out with US - Hezbollah - Should a war with the United States break out Iran "will not be alone", a militant group has warned. That message was delivered by the leader of Lebanon's Hezbollah to a mass rally in Beirut in February marking the 40th anniversary of Iran's Islamic Revolution. "If America launches war on Iran, it will not be alone in the confrontation, because the fate of our region is tied to the Islamic Republic," Hassan Nasrallah said. Yesterday President Donald Trump said he hoped the US is not on a path to war amid fears that his two most hawkish advisers could be angling for conflict. Asked if the United States was going to war with Iran, the president replied, "I hope not" - a day after he repeated a desire for dialogue, tweeting: "I'm sure that Iran will want to talk soon." The tone contrasted with a series of moves by the US and Iran that have sharply escalated tensions in the Middle East in recent days. For the past year, National Security Adviser John Bolton and Secretary of State Mike Pompeo have been the public face of the administration's "maximum pressure" campaign against Tehran. 

US Might Send 10,000 More Troops to the Middle East Amid Rising Tensions With Iran— — Citing ongoing US-Iran tensions and the secret intelligence on Iranian “threats” officials keep mentioning, CENTCOM is requesting that the Pentagon approve substantial numbers of additional US ground troops to be deployed somewhere in the Middle East.Though initial reports claimed that CENTCOM was only requesting “about 5,000” ground troops, subsequent reports said that the Pentagon are preparing a plan to present to President Trump seeking 10,000 troops. It’s not clear where these troops could be stationed, though officials emphasized they would be purely defensive. It is unlikely Iraq would welcome a large influx of US troops, however, especially when it is presented as being directed against neighboring Iran.  CENTCOM is also being very vague about what the troops are really need for, saying that they don’t generally get into public disclosure of that sort of thing. That’s putting it mildly, given how little they, and the rest of the US military, are willing to even talk to the press anymore.

On The Cusp Of War: Why Iran Won’t Fold -- Iran’s Supreme Leader, Ayatollah Seyyed Ali Khamenei, on May 14, 2019 — a week after US Secretary of State Mike Pompeo had visited Baghdad and reportedly met with a senior Iranian official — determined the course of his country’s current crisis involving the US and issued directives to the pertinent authorities. Khamenei convened a closed meeting with “the heads of power branches”, key senior officers and officials, jurists and Majlis members. He discussed and analyzed the current situation, and then outlined Tehran’s next moves. Iran would do its utmost to avoid war with the US while relentlessly pursuing its ascent as a prominent regional power. Throughout, he said, there would be no further negotiations with the US. “Iran’s refusal to negotiate with the US,” Khamenei explained, stemmed from the realization that “negotiating with current US Government is toxic”. It was through negotiations that “the US seeks to take Iran’s strengths away”; meaning to have Iran unilaterally “surrender its defensive power” and “its strategic regional influence”. Khamenei described a US offer to discuss the range of Iran’s ballistic missiles. “Reduce the range so you would not be able to hit our bases,” the US demanded, according to Khamenei. He emphasized that “talks on Iran’s strengths, including the missile power and regional influence [are] foolish”. Khamenei was confident that “there was not going to be any war” between the US and Iran, and thus the confrontation would not be “a military one”. Khamenei stressed that “there will not be a military confrontation as neither Iran nor the US seeks war because the Americans know that the war will not be beneficial for them”. Under these circumstances, Iran would continue its surge relying on proxies — “the resistance” — as the main instrument for confronting all foes. “The resistance is Iran’s only absolute choice,” he emphasized. “The Iranian nation’s definite option will be resistance in the face of the US, and in this confrontation, the US would be forced into a retreat,” Khamenei explained. “Neither we nor they, who know war will not be in their interest, are after war.” The Iranian nation was, he said, mobilized behind Tehran. Khamenei observed that “as a result of the US threats, hatred towards the US among the Iranians has increased by more than 10 times”. Khamenei concluded by stating that “the Iranian military forces are more prepared and vigilant than ever.” He repeated that in pursuing its “policy of confrontation with the Islamic Republic too, the US will definitely suffer defeat, and [the outcome] will end up to our benefit.”

Ex-NATO commander- US in 'dangerous place' with Iran -- Former Supreme Allied Commander at NATO James Stavridis said in an interview that aired Sunday that the U.S. is in a "dangerous place" with Iran, as tensions escalate. "We’re in a kind of dangerous place right now, because of escalation on both sides. It starts with Iran, of course," he told radio host John Catsimatidis on AM 970 in New York, criticizing what he believes to be Iran's "bad behavior throughout the region." "Their escalation has now been matched by the United States," Stavridis added. "Let’s be hopeful that the Iranians will see this show of force, the way intends it, and will back down." He said he believes Tehran will back down because "Iran cannot afford to go to war with us." The White House has put forth mixed messaging on Iran in recent days. President Trump has denied a report that his administration was working on a plan to deploy 120,000 troops to the Middle East, but said he would send more than that if it were necessary. He said several times that he does not want war with Iran. The Washington Post reported Thursday that Trump was frustrated with advisers such as national security adviser John Bolton and Secretary of State Mike Pompeo, because of their their hardline stances with Iran and wanted to speak to the country's leaders himself. An Iranian military official this week said that the U.S. was "holding a gun" at Tehran while calling for talks. Stavridis served as NATO's supreme allied commander from 2009 to 2013.

US Warns Assad Of Quick Response After New Chemical Attack Allegation -Here we go again with a claim that seems to surface every Spring: the US says it is looking into allegations the Syrian government has used chemical weapons as it continues an offensive against jihadists in northwest Syria.Just as in prior incidents, it appears the sole originator of the claim is al-Qaeda in Syria, currently battling it out with pro-Assad forces near Idlib. And like with prior chemical attack allegations, it comes at a moment the jihadists are fast losing ground in the area.  According to Reuters, citing US State Department remarksUS State Department says it sees signs Syrian government may be renewing use of chemical weapons, including alleged chlorine attack on May 19.  The State Department spokesman said in a written statement the US is closely monitoring Assad military operations in northwest Syria after an alleged chlorine attack on Sunday. "We are still gathering information on this incident, but we repeat our warning that if the Assad regime uses chemical weapons, the United States and our allies will respond quickly and appropriately," the statement reads. The May 19 claimed incident has received little to no media coverage since it allegedly happened Sunday, with nothing in the way of any kind of photographs or footage yet to surface, unlike prior highly publicized chemical attack claims. It allegedly occurred near Idlib or possibly in northeast Latakia province, a government stronghold southwest of Idlib, and it appears the initial claim was made by none other that Hay’at Tahrir Al-Sham before being picked up by Syrian opposition media groups and among some western Middle East think tanks analysts.  According to prior United States government statements Hay’at Tahrir Al-Sham (HTS) is synonymous with al-Qaeda in Syria (as it rebranded from Nusrah Front). Thus it once again it appears the United States is blindly parroting the claims al-Qaeda terrorists.

Washington revives Syria chemical weapons propaganda as pretext for war -Washington is once again threatening a military attack against Syria over the alleged use of chemical weapons by the government of President Bashar al-Assad. If executed, this attack would be the third in as many years by the Trump administration, which rained missiles down upon the war-ravaged country in April 2017 and April 2018 using unsubstantiated allegations of chemical weapons use as a pretext. The latest threat was issued in the form of a statement from recently appointed State Department spokeswoman Morgan Ortagus—like her predecessor recruited from the stable of right-wing Fox News commentators. “We repeat our warning that if the Assad regime uses chemical weapons, the United States and our allies will respond quickly and appropriately,” the statement said. The latest incident is alleged to have taken place in the northwestern Syrian province of Idlib in territory that is dominated by the Hay’at Tahrir al-Sham militia, the latest incarnation of the Al Nusra Front, the Syrian affiliate of Al Qaeda. Syrian troops and allied militias backed by Russian air power have been waging a battle against the Islamist forces in recent weeks. Washington’s concern is that if Damascus reasserts government control over the province it will signal an end to the nearly eight-year war for regime change backed by the US and both its NATO and regional allies, in particular Saudi Arabia and Israel, which has claimed the lives of hundreds of thousands and turned millions into refugees.

Syrian Rebels Attack Russian Air Base In Major Offensive - Some 500 Nusra-front militants, accompanied by seven tanks and about 30 pickup trucks armed with mounted heavy machine guns launched three major offensives against government troops in Idlib province on Wednesday, the Russian Defense Ministry said. The counterattack focused on the town of Kafr Nabudah, which was recently captured by the Syrian government. Militants also launched a missile attack on Russia's Hmeymim air base on Wednesday, but nine of the missiles were shot down, and another 8 didn't reach their target, the ministry added. Northwest Syria, which runs along Syria's border with Turkey, is home to the last remaining rebel strongholds, including a swath of land dominated by the Al Qaeda-linekd Nusra Front, which has adopted a new name, Tahrir al-Sham, Haaretz reports. The increase in shelling in the region has led to the displacement of 180,000 people, while the increase in shelling marked the most intense period of fighting between Bashar al-Assad and the rebels. According to RT, more than 150 rebels were killed during the morning offensive. Three tanks were destroyed, while 24 trucks mounted with heavy guns were also destroyed in the fighting.

Video Shows Israeli Settlers Starting West Bank Fires, Contradicting Army Statement -  — Israeli human rights organisation B’Tselem has released a video showing illegal Israeli settlers setting fire to fields in the occupied West Bank, contradicting the Israeli army’s claim that the blaze was started by Palestinians. The Spokesperson’s Unit of the Israeli army was yesterday forced to change its original statement, in which it claimed to have extinguished “a fire set by Palestinians”. The fires were started last Friday near the occupied West Bank villages of Burin, Urif and Asira Al-Qibliya, all located off Route 60 south of Nablus. Illegal Israeli settlers from the nearby settlement of Yitzhar had attacked Palestinians from these villages, with both groups subsequently blaming the other for causing the fires which followed. Contradicting the Israeli army’s claim of Palestinian culpability, video footage released by B’Tselem showed “two Israeli [settlers] — one of them armed with a Tavor assault rifle — entering grasslands, crouching down and walking away. Moments later, flames can be seen in the area where they’d been standing,” the Times of Israel reported. B’Tselem added that “[Israeli] soldiers who were standing next to [the settlers] did not arrest them and prevent[ed] the Palestinians from reaching their burning lands”. In a separate video, settlers can also be seen throwing rocks at nearby Palestinian homes while four Israeli soldiers stand idly by. B’Tselem stressed that the Israeli army had granted “almost total immunity” to the settlers involved in the attacks, noting that none were interrogated or arrested following the incident. Although the Israeli army today issued a new statement saying “several fires were set and quickly spread” and that, “in addition to the fires, some 20 settlers went down to the outskirts of Asirah Al-Qibliyah and began throwing rocks,” it did not admit its attempts to cover up the settlers’ attacks.

Head of Reporters Without Borders Says Israel Shot Journalists Intentionally -- The director-general of Reporters Without Borders (RSF) said yesterday that the Israeli army had deliberately targeted journalists in the occupied Gaza Strip.Christophe Deloire was speaking to the Jerusalem Post, having received the Dan David Prize in Tel Aviv on behalf of the international press freedoms watchdog.“It is a war crime to target journalists because they are journalists,” Deloire told the paper. “When Israel shot those journalists [during the Great Return March protests], it was intentional.”“The journalists could be clearly identified as journalists, with cameras and jackets and it could not be just by chance,” he added. Referring to the United Nations’ Commission of Inquiry into the Gaza protests, Deloire pointed out that the report “confirmed what we already considered a fact”. According to the Jerusalem Post, last week RSF formally asked the International Criminal Court (ICC) to investigate suspected war crimes by the Israeli military against Palestinian journalists covering protests in Gaza since 30 March 2018.

Israel Launches Massive Recruitment Drive for Social Media Keyboard Warriors -  — Israel has embarked on a massive recruitment drive to support the country’s online propaganda campaign one day after its companies were exposed for spreading disinformation and meddling in the elections of several African, Asian and Latin American countries.The new initiative, which would see the government funding pro-Israel groups overseas, was unveiled by Israel’s Ministry of Strategic Affairs, a government arm set up to combat the global rise of pro-Palestinian activism and Israel’s poor global image.Launching the initiative, Strategic Affairs Minister Gilad Erdan, who is also the public security minister, was quoted by the Times of Israel saying: “I’m proud to launch the first [government] program to support pro-Israel organizations and activists around the world.” The plan will “encourage grassroots events and online initiatives against the BDS [boycott] movement and in support of Israel. I’m certain that this program will give a significant boost to all our supporters around the world who are battling this anti-Semitism and the boycott activists,” added Erdan.Details of the tendering process for recruiting pro-Israeli activists was published in the Jewish Chronicle on 17 May a day after Israeli firms were kicked out by social media giant, Facebook, for spreading disinformation by posing as local journalists and influencers working in several African, Asian and Latin American countries.“The Ministry of Strategic Affairs and Public Diplomacy has announced the opening of submission process for application for grants in 2019 in relation to the topics listed below,” an ad in the Jewish Chronicle said. The two areas in which the Israeli government was seeking new recruits were in “support for pro-Israeli activities abroad” and “support for pro-Israeli activities on the internet aimed at target audiences abroad.”

Rocket attack near U.S. embassy in Baghdad - — A rocket was fired into the Iraqi capital’s heavily fortified Green Zone on Sunday night, landing less than a mile from the sprawling U.S. Embassy, an Iraqi military spokesman said. The apparent attack, which Iraq’s state-run news agency said did not cause any casualties, came amid heightened tensions across the Persian Gulf, after the White House ordered warships and bombers to the region earlier this month to counter an alleged, unexplained threat from Iran. The U.S. also has ordered nonessential staff out of its diplomatic posts in Iraq. It was the first such attack since September, when three mortar shells landed in an abandoned lot inside the Green Zone. There was no immediate comment from the State Department or the U.S. Embassy in Iraq on Sunday’s attack. No one claimed responsibility for the attack that took place after sunset when many Baghdad residents were indoors breaking their fast during the Muslim holy month of Ramadan. Iraqi military spokesman Brig. Gen. Yahya Rasoul told The Associated Press that a Katyusha rocket fell near the statue of the Unknown Soldier, less than a mile from the U.S. Embassy. He said the military is investigating the cause but that the rocket was believed to have been fired from east Baghdad. The area is home to Iran-backed Shiite militias. Shortly afterward the rocket launcher was discovered by security forces in the eastern neighborhood of Wihda, according to a security official who spoke on condition of anonymity because he was not authorized to speak to the media.

US Alerts Airliners To Misidentification Risk If They Fly Over Persian Gulf - The United States has issued a formal warning to commercial airliners operating over the broader Gulf region of the risk of being "misidentified" as heightened US-Iran tensions and American warships are positioned in the Persian Gulf.  Embassies in the region reportedly relayed the message issued from the Federal Aviation Administration (FAA) highlighting the risk of travel in and over the region after a week that's witnessed an alleged "sabotage" attack against four vessels near the vital Strait of Hormuz and threats and counter-threats hurled between Tehran and Washington. Lloyd's of London has also issued an alert over the increased risk to maritime shipping in the Persian Gulf area. The FAA's warning specifically said commercial airliners flying over the Persian Gulf could be targeted by "miscalculation or misidentification" even as the White House appeared to soften its tone late in the week. "Although Iran likely has no intention to target civil aircraft, the presence of multiple long-range, advanced anti-aircraft-capable weapons in a tense environment poses a possible risk of miscalculation or misidentification, especially during periods of heightened political tension and rhetoric," the warning said.It also suggested the possibility than an aircraft's navigation, communications, and electronic systems could be jammed "with little to no warning." According to ABC News:

Exxon Evacuates All Foreign Staff From Iraqi Oilfield On Security Concerns - At the end of a week that's witnessed a dangerous US military build-up in the Persian Gulf amid anti-Iran war rhetoric, Exxon Mobil has evacuated all of its foreign staff from Iraq's West Qurna 1 oilfield, flying them to Dubai until "the situation is secure," according to a company statement. Total staff evacuated is about 60, cites Reuters, and comes days after the US ordered all non-emergency personnel to leave the US embassy in Baghdad in an extremely rare security move, claiming intelligence that shows Americans are under immediate threat from Shia milias backed by Iran. Iraq’s state-owned South Oil Company, which owns the oil field from which the Exxon Mobil employees have been evacuated, announced Saturday that production is continuing without disruption at 440,000 barrels per day (bpd) under the operation of Iraqi engineers. “Exxon Mobil’s evacuation is a precautionary and temporary measure. We have no indication over any dangers, the situation is secure and very stable at the oilfield which is running at full capacity and producing 440,000 bpd,” a South Oil spokesman said. And Exxon Mobile in a separate company press release said, “ExxonMobil has programs and measures in place to provide security to protect its people, operations and facilities. We are committed to ensuring the safety of our employees and contractors at all of our facilities around the world.”

Iraq Dubs Exxon Staff Evacuation Unacceptable - The evacuation of some Exxon Mobil Corp. workers is “unacceptable and unwarranted” because it has nothing to do with the security situation in southern Iraq, according the country’s energy minister. “This withdrawal may send the wrong message about the situation in Iraq, and that’s something we reject,” Iraq’s Oil Minister Thamir Ghadhban said in a statement on Saturday. The minister sent a letter to Exxon officials seeking clarification about the decision and asking that the workers return to Iraq. Ghadhban said in an interview on Saturday that Exxon pulled about 80 people from Iraq. Oil and gas output continues unabated from all fields in the country. “No single personnel from other foreign companies withdrew,” he said. Exxon’s decision to pull staff is “precautionary and temporary,” said Abdul Jabbar Abbas Mohammed, who heads the operations committee of West Qurna-1 field which is a partnership with the U.S. company. The field is producing between 450,000 to 480,000 barrels a day and its daily functions are managed by Iraqi engineers, he said. Exxon didn’t provide specifics about its staffing in Iraq. “ExxonMobil has programs and measures in place to provide security to protect its people, operations and facilities,” the company said in an emailed statement. The U.S. ordered its non-emergency government staff to leave Iraq this week amid increasing Middle East tensions that American officials are blaming on Iran. Attacks on energy facilities, including a Saudi Arabian pipeline and several vessels including Saudi oil tankers, as well as a U.S. military buildup, are raising fears that the region may be heading toward another conflict. “For us, there is no reason calling them to withdraw,” Ghadhban said in the interview, referring to Exxon. Lukoil PJSC, BP Plc and Italy’s Eni SpA work in nearby fields including West Qurna-2, Rumaila and Zubair. “The region, south of Iraq, is all secured and peaceful. Work is going on without any halt.” Basrah Gas Co., which operates a major gas field in southern Iraq in partnership with Royal Dutch Shell Plc, also hasn’t made staff changes due to the regional tensions. “So far there is no intention for Shell to withdraw,” Shaalan Al-Darraji, spokesman for state-run Basrah Gas, said in an interview.

Rise Of Terror Chemical & Biological Attack Drones- Russian FSB Chief Says Jihadists Have Them -  The head of Russia's Federal Security Service (FSB) has warned that dangerous non-state actors now possess the capability of equipping drones with chemical weapons and biological weapons in order to maximize mass casualty events. Speaking at a major conference hosting the security agencies of Commonwealth of Independent States (CIS) on Tuesday, FSB chief Alexander Bortnikov highlighted the ever growing sophisticated and high-tech arsenal of global terrorists, including that The criminals have materials, technology and infrastructure for the production of chemical weapons and biotoxins,according to one Russian English language report.   He specifically highlighted the jihadist threat from the war-torn Middle East in places like Syria and Iraq, where Russia intervened starting in 2015 at the request of Damascus. "Although international terrorist organizations suffered great losses in Syria and Iraq, they still have enough resources, particularly provided by their foreign sponsors, to carry out attacks around the world," Bortnikov said, according to TASS.The longtime FSB chief said further that, "large jihadist units have been defeated but now they are trying either to regroup in areas not controlled by the Syrian government or to take shelter in refugee camps."He also sounded an alarm which has now for years been a familiar worry for Europe - the return of foreign fighters who had previously traveled illegally to Europe. “We know about intentions of the leaders of international terrorist organisations to use widows, wives and children of militants who come back en mass,” he said.

UK suffers crushing defeat in UN vote on Chagos Islands -The United Nations general assembly has overwhelmingly backed a motion condemning Britain’s occupation of the remote Chagos Islands in the Indian Ocean.The 116-6 vote left the UK diplomatically isolated and was also a measure of severely diminished US clout on the world stage. Washington had campaigned vigorously at the UN and directly in talks with national capitals around the world in defence of the UK’s continued control of the archipelago, where there is a US military base at Diego Garcia.The vote was in support of a motion setting a six-month deadline for Britain to withdraw from the Chagos island chain and for the islands to be reunified with neighbouring Mauritius. It endorsed an advisory opinion issued by the International Court of Justice (ICJ) in February, calling on the UK to relinquish its hold on the territory in order to complete the process of decolonisation.The US, Hungary, Israel, Australia and the Maldives backed the UK in the vote and 56 countries abstained, including France, Germany, the Netherlands, Portugal, Poland and Romania. Other European allies including Austria, Greece, Ireland, Spain, Sweden and Switzerland voted for the UK to relinquish sovereignty.The scale of the defeat for the UK and US came as a surprise even to Mauritius, in view of the concerted campaign pursued by London and Washington. 

US Accidentally Kills 17 Afghan Police After 'Miscommunication During Airstrike - US airstrikes killed 17 Afghan police officers and wounded 14 others due to a "miscommunication" while fighting with Taliban forces, according to Stars and Stripes, citing Afghan officials.  The "friendly fire" incident, which took place in Afghanistan's southern Helmand province Thursday evening, occurred after Afghan security forces called in US air support amid heavy fire from Taliban fighters just outside the province's capital, Lashkar Gah. The incident began after a police officer and two of his men decided to take down a Taliban flag from a nearby water tower on Thursday night, within walking distance from a police training center. When they arrived to remove the flag, police tripped a mine, which exploded and alerted the Taliban to their presence. The guerrillas began firing on them. Police at the nearby training center arrived to assist the first three officers but were unable to drive the Taliban back, he said. The police unit then requested air support. Residents of Lashkar Gah heard a very loud explosion around 8:30 p.m. Thursday, they said. -Stars and Stripes.  The US military says they were told that the area was clear of allied units.